Virtu Financial (NASDAQ:VIRT) vs. X Financial (NYSE:XYF) Critical Analysis

Virtu Financial (NASDAQ:VIRT) and X Financial (NYSE:XYF) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their analyst recommendations, earnings, profitability, valuation, risk, institutional ownership and dividends.

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 2.8%. X Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.0%. Virtu Financial pays out 21.8% of its earnings in the form of a dividend. X Financial pays out 9.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. X Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Virtu Financial and X Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Virtu Financial	10.43%	32.08%	3.09%
X Financial	23.30%	25.42%	14.98%

Volatility & Risk

Virtu Financial has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500. Comparatively, X Financial has a beta of 0.12, meaning that its share price is 88% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings and target prices for Virtu Financial and X Financial, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Virtu Financial	1	4	2	0	2.14
X Financial	0	0	1	0	3.00

Virtu Financial presently has a consensus price target of $41.71, indicating a potential upside of 20.68%. Given Virtu Financial’s higher probable upside, equities analysts clearly believe Virtu Financial is more favorable than X Financial.

Insider and Institutional Ownership

45.8% of Virtu Financial shares are held by institutional investors. Comparatively, 1.2% of X Financial shares are held by institutional investors. 47.2% of Virtu Financial shares are held by company insiders. Comparatively, 31.6% of X Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Virtu Financial and X Financial”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Virtu Financial	$3.38 billion	1.56	$276.42 million	$4.40	7.86
X Financial	$804.43 million	0.62	$210.97 million	$5.34	2.24

Virtu Financial has higher revenue and earnings than X Financial. X Financial is trading at a lower price-to-earnings ratio than Virtu Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Virtu Financial beats X Financial on 10 of the 16 factors compared between the two stocks.

About Virtu Financial

Virtu Financial, Inc. operates as a financial services company in the United States, Asia Pacific, Canada, EMEA, Ireland, and internationally. The company operates through two segments, Market Making and Execution Services. Its product includes offerings in execution, liquidity sourcing, analytics and broker-neutral, capital markets, and multi-dealer platforms in workflow technology. The company's product allow its clients to trade on various venues across 50 countries and in various asset classes, including global equities, ETFs, options, foreign exchange, futures, fixed income, cryptocurrencies, and myriad other commodities. Its multi-asset analytics platform provides a range of pre- and post-trade services, data products, and compliance tools for clients to invest, trade, and manage risk across global markets. The company was founded in 2008 and is headquartered in New York, New York.

About X Financial

X Financial provides personal finance services in the People’s Republic of China. The company offers services as an online marketplace connecting borrowers and investors or institutional funding partners. Its loan products include Xiaoying credit loan, which consists of Xiaoying card loan; and Xiaoying preferred loan to small business owners. The company also offers Xiaoying housing loan, a home equity loan product for property owners; investment products through Xiaoying wealth management platform, such as funds, money market, and insurance products; and loan facilitation services to other platforms. In addition, it engages in the technology development, service, and sale of products; and provision of guarantee and consulting services. The company was incorporated in 2014 and is headquartered in Shenzhen, the People’s Republic of China.