Contrasting Regional Management (NYSE:RM) and X Financial (NYSE:XYF)

X Financial (NYSE:XYF) and Regional Management (NYSE:RM) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, valuation, institutional ownership, earnings, dividends, profitability and analyst recommendations.

Profitability

This table compares X Financial and Regional Management’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
X Financial	9.94%	9.14%	5.20%
Regional Management	6.98%	12.49%	2.25%

Analyst Ratings

This is a summary of current ratings and recommmendations for X Financial and Regional Management, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
X Financial	0	1	0	0	2.00
Regional Management	0	2	2	0	2.50

Regional Management has a consensus target price of $43.00, suggesting a potential upside of 29.92%. Given Regional Management’s stronger consensus rating and higher probable upside, analysts plainly believe Regional Management is more favorable than X Financial.

Earnings & Valuation

This table compares X Financial and Regional Management”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
X Financial	$1.09 billion	0.20	$209.43 million	$1.96	2.82
Regional Management	$579.95 million	0.53	$44.41 million	$4.75	6.97

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

Volatility and Risk

X Financial has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500. Comparatively, Regional Management has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.

Insider & Institutional Ownership

1.1% of X Financial shares are owned by institutional investors. Comparatively, 98.9% of Regional Management shares are owned by institutional investors. 31.6% of X Financial shares are owned by insiders. Comparatively, 10.9% of Regional Management shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

X Financial pays an annual dividend of $0.54 per share and has a dividend yield of 9.8%. Regional Management pays an annual dividend of $1.20 per share and has a dividend yield of 3.6%. X Financial pays out 27.6% of its earnings in the form of a dividend. Regional Management pays out 25.3% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Regional Management beats X Financial on 10 of the 16 factors compared between the two stocks.

About X Financial

X Financial provides personal finance services in the People’s Republic of China. The company offers services as an online marketplace connecting borrowers and investors or institutional funding partners. Its loan products include Xiaoying credit loan, which consists of Xiaoying card loan; and Xiaoying preferred loan to small business owners. The company also offers Xiaoying housing loan, a home equity loan product for property owners; investment products through Xiaoying wealth management platform, such as funds, money market, and insurance products; and loan facilitation services to other platforms. In addition, it engages in the technology development, service, and sale of products; and provision of guarantee and consulting services. The company was incorporated in 2014 and is headquartered in Shenzhen, the People’s Republic of China.

About Regional Management

Regional Management Corp., a diversified consumer finance company, provides various installment loan products primarily to customers with limited access to consumer credit from banks, thrifts, credit card companies, and other lenders in the United States. It offers small and large installment loans; and retail loans to finance the purchase of furniture, appliances, and other retail products. The company also provides insurance products, including credit life, credit accident and health, credit property, vehicle single interest, and credit involuntary unemployment insurance; collateral protection insurance; and property insurance, as well as reinsurance products. In addition, its loans are sourced through branches, centrally-managed direct mail campaigns, and digital partners, as well as its consumer website. The company was incorporated in 1987 and is headquartered in Greer, South Carolina.