Hexindai Inc. (NASDAQ:HX): A Fundamentally Attractive Investment

I’ve been keeping an eye on Hexindai Inc. (NASDAQ:HX) because I’m attracted to its fundamentals. Looking at the company as a whole, as a potential stock investment, I believe HX has a lot to offer. Basically, it is a financially-sound company with a a great track record of performance, trading at a discount. Below is a brief commentary on these key aspects. For those interested in digger a bit deeper into my commentary, take a look at the report on Hexindai here.

Very undervalued with outstanding track record

HX delivered a triple-digit bottom-line expansion over the past couple of years, with its most recent earnings level surpassing its average level over the last five years. This illustrates a strong track record, leading to a satisfying return on equity of 44%, which paints a buoyant picture for the company. HX’s ability to maintain an adequate level of cash to meet upcoming liabilities is a good sign for its financial health. This suggests prudent control over cash and cost by management, which is a key determinant of the company’s health. Investors should not worry about HX’s debt levels because the company has none! It has only utilized funding from its equity capital to run the business, which is typically normal for a small-cap company. HX has plenty of financial flexibility, without debt obligations to meet in the short term, as well as the headroom to raise debt should it need to in the future.

NasdaqGM:HX Income Statement Export January 2nd 19
NasdaqGM:HX Income Statement Export January 2nd 19

HX’s share price is trading at below its true value, meaning that the market sentiment for the stock is currently bearish. Investors have the opportunity to buy into the stock to reap capital gains, if HX’s projected earnings trajectory does follow analyst consensus growth, which determines my intrinsic value of the company. Compared to the rest of the consumer finance industry, HX is also trading below its peers, relative to earnings generated. This supports the theory that HX is potentially underpriced.

NasdaqGM:HX Intrinsic Value Export January 2nd 19
NasdaqGM:HX Intrinsic Value Export January 2nd 19

Next Steps:

For Hexindai, I’ve put together three relevant factors you should look at:

  1. Future Outlook: What are well-informed industry analysts predicting for HX’s future growth? Take a look at our free research report of analyst consensus for HX’s outlook.
  2. Dividend Income vs Capital Gains: Does HX return gains to shareholders through reinvesting in itself and growing earnings, or redistribute a decent portion of earnings as dividends? Our historical dividend yield visualization quickly tells you what your can expect from HX as an investment.
  3. Other Attractive Alternatives : Are there other well-rounded stocks you could be holding instead of HX? Explore our interactive list of stocks with large potential to get an idea of what else is out there you may be missing!

To help readers see past 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. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.