Comparing Pagaya Technologies (NASDAQ:PGY) and LexinFintech (NASDAQ:LX)

LexinFintech (NASDAQ:LX) and Pagaya Technologies (NASDAQ:PGY) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, valuation, dividends, analyst recommendations, institutional ownership and profitability.

Profitability

This table compares LexinFintech and Pagaya Technologies’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
LexinFintech	5.80%	8.16%	3.46%
Pagaya Technologies	-14.58%	-3.10%	-1.55%

Analyst Ratings

This is a breakdown of current ratings and recommmendations for LexinFintech and Pagaya Technologies, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LexinFintech	0	1	0	0	2.00
Pagaya Technologies	0	2	7	0	2.78

LexinFintech currently has a consensus price target of $2.12, suggesting a potential downside of 41.27%. Pagaya Technologies has a consensus price target of $22.89, suggesting a potential upside of 56.56%. Given Pagaya Technologies’ stronger consensus rating and higher probable upside, analysts clearly believe Pagaya Technologies is more favorable than LexinFintech.

Insider and Institutional Ownership

57.1% of Pagaya Technologies shares are owned by institutional investors. 27.8% of LexinFintech shares are owned by insiders. Comparatively, 19.7% of Pagaya Technologies shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Valuation and Earnings

This table compares LexinFintech and Pagaya Technologies”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LexinFintech	$13.90 billion	0.04	$150.14 million	$0.67	5.39
Pagaya Technologies	$812.05 million	1.29	-$128.44 million	($1.97)	-7.42

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

Risk and Volatility

LexinFintech has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Pagaya Technologies has a beta of 6.33, suggesting that its stock price is 533% more volatile than the S&P 500.

Summary

LexinFintech beats Pagaya Technologies on 8 of the 14 factors compared between the two stocks.

About LexinFintech

LexinFintech Holdings Ltd., through its subsidiaries, provides online consumer finance services in the People's Republic of China. The company operates Fenqile.com, an online consumption and consumer finance platform that offers installment purchase and personal installment loans, as well as online direct sales with installment payment terms; and Le Hua Card, a scenario-based lending. It also provides technology-driven platform services for financial institution customers and partners to increase revenues, manage financial risks, enhance operating efficiency and service quality, enhance collections, and reduce overall costs; Maiya application, a location-based services shopping experience with buy-now and pay-later options; and Juzi Licai, an online investment platform. In addition, the company offers technical support and consulting, software development, financing guarantee, and financial technology services. The company was formerly known as Staging Finance Holding Ltd. and changed its name to LexinFintech Holdings Ltd. in March 2017. LexinFintech Holdings Ltd. was founded in 2013 and is headquartered in Shenzhen, the People's Republic of China.

About Pagaya Technologies

Pagaya Technologies Ltd., a product-focused technology company, deploys data science and proprietary artificial intelligence-powered technology for financial institutions and investors in the United States, Israel, the Cayman Islands, and internationally. The company develops and implements proprietary artificial intelligence technology and related software solutions to assist partners to originate loans and other assets. Its partners include high-growth financial technology companies, incumbent banks and financial institutions, auto finance providers, and residential real estate service providers. Pagaya Technologies Ltd. was incorporated in 2016 and is headquartered in New York, New York.