X Financial (NYSE:XYF) Emerges as a Strong CAN SLIM Investment Candidate

X Financial (NYSE:XYF) has appeared as a candidate for investors using the CAN SLIM methodology, a growth-focused investment strategy created by William O’Neil. The system joins fundamental and technical analysis to find companies with solid earnings momentum, leadership qualities, and institutional support, ideally during positive market conditions. CAN SLIM highlights quarterly and annual earnings growth, new products or market positions, supply and demand, relative strength, and overall market direction.

Several fundamental metrics fit with CAN SLIM criteria, making XYF a notable candidate:

• Earnings and Sales Growth: The system needs solid recent quarterly performance. XYF reported a quarterly earnings per share (EPS) growth of 44.26% year-over-year and revenue growth of 60.43%, greatly exceeding the common thresholds of 20-25% for EPS and sales. This acceleration points to strong operational momentum and satisfies the “C” criterion of current quarterly growth.

• Annual Earnings Increases: CAN SLIM searches for a history of meaningful annual EPS growth. XYF’s three-year EPS compound annual growth rate (CAGR) of 28.92% is higher than the suggested 25% minimum, showing a steady upward path in profitability. This meets the “A” criterion for annual earnings growth.

• Return on Equity and Debt Levels: High return on equity (ROE) is preferred; XYF’s ROE of 21.99% is well above the 10% benchmark and ranks well within its industry. Also, the company keeps a conservative debt-to-equity ratio of 0.34, pointing to good financial health and lower leverage risk, supporting the “S” (Supply and Demand) component by reflecting careful capital structure.

• Relative Strength and Leadership: A key technical part of CAN SLIM is relative strength (RS), which compares a stock’s performance against the broader market. XYF’s RS rating of 97.11 means it has done better than 97% of all stocks, emphasizing its market leadership, a direct match for the “L” (Leader or Laggard) criterion.

• Institutional Sponsorship: While institutional ownership is fairly low at 3.89%, below the common CAN SLIM ceiling of 85%, this could point to early-stage institutional discovery instead of overcrowding. For growth-focused investors, this can be a chance before wider institutional accumulation, fitting with the “I” criterion.

From a technical view, XYF shows a mixed but interesting profile. The stock has displayed outstanding 12-month performance, increasing over 216%, and shows high relative strength. However, recent price action has been volatile, with neutral short- and long-term trends and movement within a wide range. The present technical rating of 5/10 indicates that while the stock has solid momentum historically, it might be waiting for a more distinct positive signal or breakout pattern for a best entry, a consideration under the “M” (Market Direction) and “N” (New Highs) aspects of CAN SLIM.

Fundamentally, XYF receives a rating of 5/10, with key strengths in profitability, growth, and valuation. The company’s profit margins, returns on equity and assets, and recent growth rates are strong within the consumer finance industry. Its current P/E ratio of 2.98 also indicates appealing valuation compared to peers and the broader market.

For investors wanting to use the CAN SLIM approach more, a pre-set screener based on these criteria can be found here. This tool can assist in finding other companies showing similar growth, value, and momentum traits.

For a more detailed study of XYF’s financial and technical position, readers can see the full fundamental report and technical report.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy, sell, or hold any security. Investors should conduct their own research and consult with a qualified financial advisor before making investment decisions.