QIFU TECHNOLOGY INC (NASDAQ:QFIN) – A Strong Candidate for GARP Investors

QIFU TECHNOLOGY INC (NASDAQ:QFIN) stands out as a compelling pick for investors seeking growth at a reasonable price (GARP). The company, a Chinese credit technology services provider, meets key criteria from Peter Lynch’s investment strategy, balancing strong growth with sound financial health and an attractive valuation.

Why QFIN Fits the GARP Approach

• Sustainable Growth: QFIN has delivered a 5-year average EPS growth of 19.96%, aligning with Lynch’s preference for steady but not excessive growth (15-30% range). Future EPS growth is projected at 19.29%, indicating consistency.
• Attractive Valuation: With a PEG ratio of 0.29 (well below Lynch’s threshold of 1), the stock appears undervalued relative to its growth. Its P/E of 5.87 is also significantly lower than the industry and S&P 500 averages.
• Strong Profitability: The company boasts an ROE of 29.92%, far exceeding Lynch’s 15% minimum. Margins are robust, with a 38.98% profit margin and 45.98% operating margin, ranking near the top of its industry.
• Healthy Balance Sheet: QFIN maintains a conservative debt profile, with a debt-to-equity ratio of 0.27, below Lynch’s preferred 0.6 threshold. Liquidity is solid, with a current ratio of 3.08.

Fundamental Strengths

Our fundamental analysis report rates QFIN an 8/10, highlighting its exceptional profitability and financial health. Key takeaways:

• Industry-Leading Margins: Outperforms 96% of peers in operating and profit margins.
• Efficient Capital Use: ROIC of 16.09% and ROA of 12.40% reflect effective capital allocation.
• Dividend Potential: Offers a 3.05% yield, above the S&P 500 average, though dividend sustainability requires monitoring.

For investors applying Lynch’s principles, QFIN presents a rare mix of growth, quality, and value.

Our Peter Lynch Strategy screener lists more stocks matching these criteria and is updated daily.

Disclaimer

This is not investing advice! The article highlights observations at the time of writing, but you should always conduct your own analysis before making investment decisions.