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Qifu Technology Stock Soars 104% in 6 Months: Should You Buy It?
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Qifu Technology, Inc. (QFIN - Free Report) stock has shown exceptional growth over the past six months. The stock has skyrocketed 104.4%, outperforming the 50.5% rally of the industry and 11.4% growth of the Zacks S&P 500 composite.
QFIN’s performance is significantly higher than that of its competitors, SLM Corporation (SLM - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) . SLM and OMF have risen 36.3% and 15.4% in the same period, respectively.
Six Months Price Performance
Image Source: Zacks Investment Research
As of the last trading session, the QFIN stock closed at $38.3, 5.2% down from the 52-week high of $40.3. Qifu Technology is trading above its 50-day moving average, indicating a bullish sentiment among investors.
QFIN Trades Above 50-SMA
Image Source: Zacks Investment Research
Given the remarkable upsurge in the QFIN stock, investors might be inclined to buy it. However, the lingering question prevails whether it is the right time to jump on the bandwagon and buy the stock. Let us find out.
Qifu Technology’s Robust Risk Management
The company’s D1 delinquency rate has declined over the past three quarters, while the 30-day collection rate increased over the same period. The D1 delinquency rates in the first, second and third quarters of 2024 were 4.9%, 4.8%, and 4.6%, respectively, while the 30-day collection rate was 85.1%, 86.3% and 87.4% for the same periods.
The 90-day default rate improved from 3.4% in the second quarter of 2024 to 2.7% in the third quarter of 2024. Funding costs were lowered by 30 basis points (bps) per quarter and more than 150 bps annually, led by high liquidity in the system and lower average cost of Asset-Backed Securities issuance and trusts.
This hints at a more accurate initial assessment of borrowers and effective collection practices that encourage timely payments. It translates into fewer bad debts and enhanced financial performance.
Economic Stimulus to Boost QFIN Lending Services’ Demand
The People’s Bank of China (“PBOC”) lowered the reverse repurchase rate from 1.5% to 1.7% in September 2024. The Required Reserve Ratio (RRR) was reduced for major banks to 9.5% from 10%. The lowering of RRR adds to the liquidity in the banking system, which reduces the cost of lending. Borrowers are appealed to lending money as the cost of loans becomes inexpensive.
A reduction allows banks to amass more money to lend to borrowers, giving these banks more flexibility. The stimulus measures can increase lending, resulting in stronger demand for QFIN’s lending-based services. Given that the PBOC announces additional stimulus in the upcoming months, it could improve the lending demand for QFIN in the long run.
Qifu Technology Stock Looks Inexpensive
The QFIN stock looks cheap and appealing to investors. It is priced at 6.3 times forward 12-month earnings per share, which is way lower than the industry’s average of 41.7 times. When looking at the trailing 12-month EV-to-EBITDA ratio, QFIN is trading at 4.9 times, far below the industry’s average of 89.1 times.
QFIN’s Robust Returns on Capital
Return on equity (ROE), a measure of profitability, reflects the degree to which a company uses its shareholders' investments to generate earnings. QFIN’s trailing 12-month ROE is 24.4% greater than the industry’s average of 3.4%.
Qifu Technology’s Liquidity Surpasses Industry
The company has a strong liquidity position, with a current ratio of 2.56 at the end of the third quarter of 2024, higher than the industry average of 2.16. A current ratio above 1 indicates that the company can easily pay off its short-term obligations.
Image Source: Zacks Investment Research
QFIN’s Strong Top & Bottom Lines
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.3 billion, indicating 1.8% growth from the year-ago reported level. For 2025, the top line is pegged at $2.4 billion, suggesting a 3.7% year-over-year increase.
The consensus estimate for 2024 earnings is pegged at $5.7 per share, suggesting a 55.2% increase from the prior year's actual. For 2025, the bottom line is pinned at $6.4 per share, hinting at a 12% year-over-year rise.
Ride the QFIN Tide Now
Qifu Technology’s ability to manage risks is translated from its ability to lower the D1 delinquency rate and hike the 30-day collection rate. The company benefits from the PBOC’s economic stimulus and is positioned to gain even more if the stimulus persists in the upcoming months. Its strong top and bottom-line outlook looks encouraging.
We believe that the inexpensiveness of the stock, coupled with healthy capital returns and strong liquidity, make it a deserving candidate for your long-term portfolio. Hence, investors should not waste any time and buy the stock right now.
Image: Bigstock
Qifu Technology Stock Soars 104% in 6 Months: Should You Buy It?
Qifu Technology, Inc. (QFIN - Free Report) stock has shown exceptional growth over the past six months. The stock has skyrocketed 104.4%, outperforming the 50.5% rally of the industry and 11.4% growth of the Zacks S&P 500 composite.
QFIN’s performance is significantly higher than that of its competitors, SLM Corporation (SLM - Free Report) and OneMain Holdings, Inc. (OMF - Free Report) . SLM and OMF have risen 36.3% and 15.4% in the same period, respectively.
Six Months Price Performance
As of the last trading session, the QFIN stock closed at $38.3, 5.2% down from the 52-week high of $40.3. Qifu Technology is trading above its 50-day moving average, indicating a bullish sentiment among investors.
QFIN Trades Above 50-SMA
Given the remarkable upsurge in the QFIN stock, investors might be inclined to buy it. However, the lingering question prevails whether it is the right time to jump on the bandwagon and buy the stock. Let us find out.
Qifu Technology’s Robust Risk Management
The company’s D1 delinquency rate has declined over the past three quarters, while the 30-day collection rate increased over the same period. The D1 delinquency rates in the first, second and third quarters of 2024 were 4.9%, 4.8%, and 4.6%, respectively, while the 30-day collection rate was 85.1%, 86.3% and 87.4% for the same periods.
The 90-day default rate improved from 3.4% in the second quarter of 2024 to 2.7% in the third quarter of 2024. Funding costs were lowered by 30 basis points (bps) per quarter and more than 150 bps annually, led by high liquidity in the system and lower average cost of Asset-Backed Securities issuance and trusts.
This hints at a more accurate initial assessment of borrowers and effective collection practices that encourage timely payments. It translates into fewer bad debts and enhanced financial performance.
Economic Stimulus to Boost QFIN Lending Services’ Demand
The People’s Bank of China (“PBOC”) lowered the reverse repurchase rate from 1.5% to 1.7% in September 2024. The Required Reserve Ratio (RRR) was reduced for major banks to 9.5% from 10%. The lowering of RRR adds to the liquidity in the banking system, which reduces the cost of lending. Borrowers are appealed to lending money as the cost of loans becomes inexpensive.
A reduction allows banks to amass more money to lend to borrowers, giving these banks more flexibility. The stimulus measures can increase lending, resulting in stronger demand for QFIN’s lending-based services. Given that the PBOC announces additional stimulus in the upcoming months, it could improve the lending demand for QFIN in the long run.
Qifu Technology Stock Looks Inexpensive
The QFIN stock looks cheap and appealing to investors. It is priced at 6.3 times forward 12-month earnings per share, which is way lower than the industry’s average of 41.7 times. When looking at the trailing 12-month EV-to-EBITDA ratio, QFIN is trading at 4.9 times, far below the industry’s average of 89.1 times.
QFIN’s Robust Returns on Capital
Return on equity (ROE), a measure of profitability, reflects the degree to which a company uses its shareholders' investments to generate earnings. QFIN’s trailing 12-month ROE is 24.4% greater than the industry’s average of 3.4%.
Qifu Technology’s Liquidity Surpasses Industry
The company has a strong liquidity position, with a current ratio of 2.56 at the end of the third quarter of 2024, higher than the industry average of 2.16. A current ratio above 1 indicates that the company can easily pay off its short-term obligations.
QFIN’s Strong Top & Bottom Lines
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $2.3 billion, indicating 1.8% growth from the year-ago reported level. For 2025, the top line is pegged at $2.4 billion, suggesting a 3.7% year-over-year increase.
The consensus estimate for 2024 earnings is pegged at $5.7 per share, suggesting a 55.2% increase from the prior year's actual. For 2025, the bottom line is pinned at $6.4 per share, hinting at a 12% year-over-year rise.
Ride the QFIN Tide Now
Qifu Technology’s ability to manage risks is translated from its ability to lower the D1 delinquency rate and hike the 30-day collection rate. The company benefits from the PBOC’s economic stimulus and is positioned to gain even more if the stimulus persists in the upcoming months. Its strong top and bottom-line outlook looks encouraging.
We believe that the inexpensiveness of the stock, coupled with healthy capital returns and strong liquidity, make it a deserving candidate for your long-term portfolio. Hence, investors should not waste any time and buy the stock right now.
QFIN currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.