QIFU TECHNOLOGY INC (NASDAQ:QFIN) – A Quality Stock Worth Considering

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QIFU TECHNOLOGY INC (NASDAQ:QFIN) stands out as a potential candidate for quality investors, meeting key criteria for profitability, financial health, and growth. The company operates in China’s consumer finance sector, providing credit technology services with a strong track record of performance. Below, we examine why QFIN aligns with the principles of quality investing.

Key Strengths

Strong Profitability

ROIC (Excluding Cash & Goodwill): 26.0% – Well above the 15% threshold for quality stocks, indicating efficient capital allocation.
EBIT Growth (5Y CAGR): 21.1% – Demonstrates consistent operational expansion.
Profit Margins: Operating margin of 43.9% and net margin of 36.5%, both ranking near the top of the industry.

Healthy Financial Position

Debt/FCF Ratio: 0.15 – A minimal debt burden relative to cash flow, suggesting strong solvency.
Current Ratio: 2.45 – Reflects solid liquidity and ability to meet short-term obligations.

Growth & Cash Flow Quality

Revenue Growth (5Y CAGR): 8.5% – Steady top-line expansion.
Profit Quality (5Y Avg.): 141.6% – Indicates strong conversion of net income into free cash flow.

Attractive Valuation

P/E Ratio: 7.2 – Significantly below industry and S&P 500 averages.
Forward P/E: 5.8 – Suggests earnings growth is not yet fully priced in.

Fundamental Analysis Summary

QFIN earns a high fundamental rating of 8/10, excelling in profitability and financial health while offering reasonable growth prospects. Analysts expect continued earnings growth, supported by efficient operations and a disciplined balance sheet.

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Disclaimer

This is not investment advice. Always conduct your own research before making investment decisions.