Head-To-Head Comparison: Burford Capital (NYSE:BUR) versus X Financial (NYSE:XYF)

Burford Capital (NYSE:BUR) and X Financial (NYSE:XYF) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, earnings, risk, institutional ownership and profitability.

Valuation & Earnings

This table compares Burford Capital and X Financial”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Burford Capital	$413.36 million	4.07	$62.57 million	$0.27	28.47
X Financial	$804.43 million	0.23	$210.97 million	$5.66	0.78

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

Dividends

Burford Capital pays an annual dividend of $0.12 per share and has a dividend yield of 1.6%. X Financial pays an annual dividend of $0.24 per share and has a dividend yield of 5.5%. Burford Capital pays out 44.4% of its earnings in the form of a dividend. X Financial pays out 4.2% 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.

Volatility and Risk

Burford Capital has a beta of 0.66, suggesting that its share price is 34% less volatile than the S&P 500. Comparatively, X Financial has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Institutional and Insider Ownership

1.2% of X Financial shares are owned by institutional investors. 8.9% of Burford Capital shares are owned by insiders. Comparatively, 31.6% of X Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Burford Capital	15.14%	1.97%	0.97%
X Financial	22.75%	24.56%	14.10%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Burford Capital and X Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Burford Capital	2	0	3	0	2.20
X Financial	0	1	0	0	2.00

Burford Capital currently has a consensus target price of $16.00, indicating a potential upside of 108.12%. Given Burford Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Burford Capital is more favorable than X Financial.

Summary

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

About Burford Capital

Burford Capital Limited provides legal finance products and services worldwide. The company operates through two segments, Capital Provision, and Asset Management and Other Provision. The Capital Provision segment provides capital to the legal industry or in connection with legal matters directly and through investment in private funds; legal risk management services; lower risk legal finance business focusing on pre-settlement litigation matters with lower risk and lower expected returns; post-settlement finance; and complex strategies in which it acts as a principal and acquires assets that are mispriced. The Asset Management and Other Services segment provides services to the legal industry, including litigation insurance. Burford Capital Limited was incorporated in 2009 and is based in Saint Peter Port, Guernsey.

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.