Encore Capital Group (NASDAQ:ECPG) and LexinFintech (NASDAQ:LX) Critical Survey

Encore Capital Group (NASDAQ:ECPG) and LexinFintech (NASDAQ:LX) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, institutional ownership, earnings, profitability, risk and analyst recommendations.

Volatility and Risk

Encore Capital Group has a beta of 1.48, meaning that its stock price is 48% more volatile than the S&P 500. Comparatively, LexinFintech has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Encore Capital Group and LexinFintech, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encore Capital Group	1	0	3	1	2.80
LexinFintech	0	2	0	0	2.00

Encore Capital Group presently has a consensus price target of $61.67, suggesting a potential upside of 13.55%. LexinFintech has a consensus price target of $3.50, suggesting a potential upside of 13.64%. Given LexinFintech’s higher possible upside, analysts clearly believe LexinFintech is more favorable than Encore Capital Group.

Profitability

This table compares Encore Capital Group and LexinFintech’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Encore Capital Group	-2.89%	25.27%	4.30%
LexinFintech	13.28%	16.11%	8.09%

Valuation & Earnings

This table compares Encore Capital Group and LexinFintech”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encore Capital Group	$1.32 billion	0.92	-$139.24 million	($1.83)	-29.68
LexinFintech	$1.95 billion	0.27	$150.76 million	$1.42	2.17

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

Summary

LexinFintech beats Encore Capital Group on 7 of the 13 factors compared between the two stocks.

About Encore Capital Group

Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services. In addition, the company engages in debt servicing and other portfolio management services to credit originator for non-performing loans. Further, it offers credit management services. Encore Capital Group, Inc. was incorporated in 1999 and is headquartered in San Diego, California.

About LexinFintech

LexinFintech Holdings Ltd., through its subsidiaries, provides online consumer finance services in the People's Republic of China. The company operates Fenqile.com, an online consumption and consumer finance platform that offers installment purchase and personal installment loans, as well as online direct sales with installment payment terms; and Le Hua Card, a scenario-based lending. It also provides technology-driven platform services for financial institution customers and partners to increase revenues, manage financial risks, enhance operating efficiency and service quality, enhance collections, and reduce overall costs; Maiya application, a location-based services shopping experience with buy-now and pay-later options; and Juzi Licai, an online investment platform. In addition, the company offers technical support and consulting, software development, financing guarantee, and financial technology services. The company was formerly known as Staging Finance Holding Ltd. and changed its name to LexinFintech Holdings Ltd. in March 2017. LexinFintech Holdings Ltd. was founded in 2013 and is headquartered in Shenzhen, the People's Republic of China.