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A Holistic Look At LexinFintech Holdings Ltd. (NASDAQ:LX)

Simply Wall St

Attractive stocks have exceptional fundamentals. In the case of LexinFintech Holdings Ltd. (NASDAQ:LX), there's is a financially-healthy company with a strong history of performance, trading at a discount. Below, I've touched on some key aspects you should know on a high level. For those interested in understanding where the figures come from and want to see the analysis, take a look at the report on LexinFintech Holdings here.

Outstanding track record and undervalued

LX delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. The strong earnings growth is reflected in impressive double-digit 50% return to shareholders, which is an optimistic signal for the future. LX is financially robust, with ample cash on hand and short-term investments to meet upcoming liabilities. This implies that LX manages its cash and cost levels well, which is an important determinant of the company’s health. LX's has produced operating cash levels of 0.67x total debt over the past year, which implies that LX's management has put its borrowings into good use by generating enough cash to cover a sufficient portion of borrowings.

NasdaqGM:LX Income Statement, August 22nd 2019

LX is currently trading below its true value, which means the market is undervaluing the company's expected cash flow going forward. This mispricing gives investors the opportunity to buy into the stock at a cheap price compared to the value they will be receiving, should analysts' consensus forecast growth be correct. Compared to the rest of the consumer finance industry, LX is also trading below its peers, relative to earnings generated. This bolsters the proposition that LX's price is currently discounted.

NasdaqGM:LX Price Estimation Relative to Market, August 22nd 2019

Next Steps:

For LexinFintech Holdings, there are three key factors you should further examine:

  1. Future Outlook: What are well-informed industry analysts predicting for LX’s future growth? Take a look at our free research report of analyst consensus for LX’s outlook.
  2. Dividend Income vs Capital Gains: Does LX return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from LX as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of LX? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.