Financial Analysis: CNFinance (NYSE:CNF) versus StoneCo (NASDAQ:STNE)

CNFinance (NYSE:CNF) and StoneCo (NASDAQ:STNE) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, risk and valuation.

Profitability

This table compares CNFinance and StoneCo’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CNFinance	N/A	N/A	N/A
StoneCo	22.92%	22.19%	4.10%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for CNFinance and StoneCo, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CNFinance	1	0	0	0	1.00
StoneCo	0	6	4	0	2.40

StoneCo has a consensus price target of $14.30, suggesting a potential upside of 41.58%. Given StoneCo’s stronger consensus rating and higher possible upside, analysts plainly believe StoneCo is more favorable than CNFinance.

Institutional & Insider Ownership

73.2% of StoneCo shares are held by institutional investors. 25.8% of CNFinance shares are held by insiders. Comparatively, 11.3% of StoneCo shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares CNFinance and StoneCo”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CNFinance	$80.76 million	0.17	-$65.43 million	$2.20	0.89
StoneCo	$2.53 billion	0.99	$425.73 million	$2.48	4.07

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

Risk & Volatility

CNFinance has a beta of -0.14, meaning that its share price is 114% less volatile than the S&P 500. Comparatively, StoneCo has a beta of 1.75, meaning that its share price is 75% more volatile than the S&P 500.

Summary

StoneCo beats CNFinance on 13 of the 14 factors compared between the two stocks.

About CNFinance

CNFinance Holdings Limited, through its subsidiaries, provides home equity loan services in the People's Republic of China. It offers micro credit loan services for micro and small-enterprise owners; and loan lending agency services for financial institutions. The company provides bridge loan products, which are unsecured short-term loans to pay off borrowers' existing loans secured by real property. It operates approximately 87 branches and sub-branches in China. The company was founded in 1999 and is headquartered in Guangzhou, the People's Republic of China.

About StoneCo

StoneCo Ltd. provides financial technology and software solutions to merchants and integrated partners to conduct electronic commerce across in-store, online, and mobile channels in Brazil. It distributes its solutions, principally through proprietary Stone Hubs, which offer hyper-local sales and services; and sells solutions to brick-and-mortar and digital merchants through sales team. The company served small-and-medium-sized businesses; and marketplaces, e-commerce platforms, and integrated software vendors. StoneCo Ltd. was founded in 2000 and is headquartered in George Town, the Cayman Islands.