X Financial-ADR (NYSE:XYF) Stands Out as a Strong CAN SLIM Candidate

The CAN SLIM investment methodology, created by William O’Neil, integrates fundamental and technical analysis to find high-growth market leaders. This methodical process assesses companies using seven main factors represented by the acronym: Current quarterly earnings growth, Annual earnings increases, New products or services, Supply and demand dynamics, Leadership status, Institutional sponsorship, and Market direction. The plan looks for companies showing solid earnings momentum, new business models, and technical health during good market periods.

X Financial-ADR (NYSE:XYF) functions as an online personal finance company located in Shenzhen, China, offering technology-based personal finance services with products like Xiaoying Card Loan and Xiaoying Preferred Loan. The company’s WinSAFE risk control system creates detailed risk profiles of potential borrowers using information from credit data suppliers.

Earnings and Sales Momentum

The “C” in CAN SLIM highlights current quarterly earnings and sales growth, needing minimum rises of 20% for earnings and 25% for sales versus the same quarter the previous year. X Financial presents very good results here:

• Quarterly EPS growth of 44.26%
• Quarterly revenue growth of 60.43%

These numbers are well above the CAN SLIM minimums and point to solid operational momentum. The company’s capacity to increase earnings more quickly than revenue hints at better operational efficiency and margin improvement.

Annual Earnings Growth and Profitability

The “A” factor looks at steady annual earnings growth and good profitability measures. X Financial displays:

• Three-year EPS growth rate of 28.92%
• Return on Equity of 21.99%

The three-year growth rate is higher than the 25% minimum, and the ROE is much greater than the 10% minimum. This pairing shows both past growth stability and effective capital use, important elements in the CAN SLIM assessment of lasting business models.

Financial Health and Supply Dynamics

The “S” part reviews supply and demand factors, including balance sheet health and share structure. X Financial has:

• Debt-to-equity ratio of 0.34
• Institutional ownership of 4.35%

The low debt ratio, far under the maximum 2.0 level, shows careful financial management and lower bankruptcy risk. The small institutional ownership offers a possibility for future institutional buying, which might create upward pressure as more institutions find the stock.

Market Leadership

The “L” factor finds market leaders using relative strength ratings. X Financial presents:

• Relative strength of 88.05

This number shows the stock is performing better than about 88% of all stocks in the market, putting it clearly in the leadership group wanted by CAN SLIM investors. High relative strength frequently connects with institutional buying and positive momentum traits.

Technical and Fundamental Assessment

According to the technical analysis report, X Financial displays varied short-term signals but keeps up good relative performance in its industry. The stock performs better than 81% of consumer finance peers and shows a reasonable setup pattern with lower volatility in recent consolidation.

The fundamental analysis report gives X Financial an overall score of 5 out of 10, pointing out very good profitability measures compared to industry peers. The company shows:

• Excellent return on invested capital of 32.59%
• Good profit margins of 24.76%
• Appealing valuation with P/E ratio of 2.88

While the fundamental report mentions some issues about financial health, the mix of solid growth, high profitability, and low valuation forms a noteworthy profile for growth investors.

Market Context

The present market situation displays both short-term and long-term upward trends for the S&P 500, creating a good setting for CAN SLIM investing. This matches the “M” factor stressing the value of general market direction when using the plan.

Investment Considerations

For investors wanting to find other companies fitting CAN SLIM factors, the pre-configured screener offers a beginning point for locating possible candidates. The screener can be adjusted according to personal risk tolerance and investment choices.

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice, recommendation, or endorsement of any security. Investors should conduct their own research and consult with financial advisors before making investment decisions. Past performance does not guarantee future results.