Yintech Investment Holdings Limited (NASDAQ:YIN), a US$643.43M small-cap, is a capital market firm operating in an industry, which now face the choice of either being disintermediated or proactively disrupting their own business models to thrive in the future. Financial services analysts are forecasting for the entire industry, a strong double-digit growth of 13.44% in the upcoming year , and a massive growth of 38.89% over the next couple of years. This rate is larger than the growth rate of the US stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Yintech Investment Holdings is a laggard or leader relative to its financial sector peers. Check out our latest analysis for Yintech Investment Holdings
What’s the catalyst for Yintech Investment Holdings’s sector growth?
The threat of disintermediation in the capital markets industry is both real and imminent, taking profits away from traditional incumbent financial institutions. In the previous year, the industry saw growth in the teens, beating the US market growth of 13.52%. Yintech Investment Holdings lags the pack with its negative growth rate of -96.12% over the past year, which indicates the company will be growing at a slower pace than its capital markets peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of over 100% in the upcoming year.
Is Yintech Investment Holdings and the sector relatively cheap?
The capital markets industry is trading at a PE ratio of 15.61x, relatively similar to the rest of the US stock market PE of 18.43x. This illustrates a fairly valued sector relative to the rest of the market, indicating low mispricing opportunities. However, the industry returned a higher 14.20% compared to the market’s 11.17%, potentially illustrative of past tailwinds. On the stock-level, Yintech Investment Holdings is trading at a higher PE ratio of 83.2x, making it more expensive than the average capital markets stock. In terms of returns, Yintech Investment Holdings generated 0.77% in the past year, which is 13.43% below the capital markets sector.
Yintech Investment Holdings’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this higher growth prospect is also reflected in the company’s price, suggested by its higher PE ratio relative to its peers. If Yintech Investment Holdings has been on your watchlist for a while, now may not be the best time to enter into the stock since it is trading at a higher valuation compared to other capital markets companies. However, before you make a decision on the stock, I suggest you look at Yintech Investment Holdings’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has YIN’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of Yintech Investment Holdings? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.