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What's in the Cards for LexinFintech (LX) in Q1 Earnings?

Zacks Equity Research

LexinFintech Holdings Ltd. LX is slated to announce first-quarter 2019 results on May 17, before the market opens. This China-based online consumer finance marketplace’s quarterly earnings are expected to grow year over year.

In the fourth quarter of 2018, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an increase in total operating revenues, partly offset by higher expenses.

Notably, the consensus estimate for earnings of 29 cents for the to-be-reported quarter has remained unchanged over the past seven days. Nevertheless, the figure suggests rise of 93.3% from the year-ago quarter.

LexinFintech Holdings Ltd. Sponsored ADR Price and Consensus

LexinFintech Holdings Ltd. Sponsored ADR Price and Consensus

LexinFintech Holdings Ltd. Sponsored ADR price-consensus-chart | LexinFintech Holdings Ltd. Sponsored ADR Quote

Factors to Influence Q1 Results

Given continued growth in LexinFintech’s business, its loan origination volume in the to-be-reported quarter is likely to increase.

Therefore, with higher loan origination volume, the company’s loan facilitation and servicing fees are likely to improve, thereby positively impacting total financial services income. While slowdown in the China economy may have a slight adverse impact, overall revenues are expected to grow.

On the cost front, the company’s operating expenses have remained elevated over the past few quarters. In fact, given the continued rise in share-based compensation costs, overall expenses are likely to increase this time as well.

Earnings Whispers

Here is what our quantitative model predicts:

We cannot conclusively predict whether LexinFintech will be able to beat earnings estimates this time around. That’s because it does not have the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or higher, which are required to be reasonably confident of an earnings beat.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for LexinFintech is 0.00%.

Zacks Rank: LexinFintech currently sports a Zacks Rank #1 (Strong Buy). While this increases the predictive power of the ESP, we also need a positive Earnings ESP to be sure of an earnings surprise call.

Stocks to Consider

Navient Corporation NAVI has been witnessing upward earnings estimate revisions over the past 60 days. Moreover, the stock has rallied 9.8% in the past six months. It currently sports a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Oaktree Capital Group, LLC OAK has been witnessing upward estimate revisions over the past 60 days. Additionally, the stock has jumped 23.2% over the past six months. It currently sports a Zacks Rank #1.

Ally Financial Inc. ALLY currently carries a Zacks Rank #2 (Buy). Its earnings estimates have increased over the past 60 days. Also, the company’s shares gained nearly 16% in six months’ time.

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Navient Corporation (NAVI) : Free Stock Analysis Report
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