Qudian is down over 20% after earnings miss

in EARNINGS/INVESTING IDEAS/MARKET MOVING by

Qudian Inc. (NYSE:QD) is reported Q3 earnings results on November 18, 2019. Qudian is a provider of online small consumer credit in China.

The company is reported earnings of $0.46/share on revenue of $362.5 million. The earnings report missed analyst expectations of earnings per share (EPS) of $0.48/share based on a poll of 4 analysts representing growth of 53.8% over the same quarter last year when the company reported earnings of $0.31/share.

The company also missed revenue expectations — analysts were expecting the company to report revenue of around $307.3 million for the quarter implying a year-over-year (YoY) growth of 9.4%. Last year the company reported $280.8 million in revenue for the quarter.

Expected to report EPS growth of $0.17/share for Q3, 2019
Metric Expected Prior Year YoY Change
Revenue $307.33 $280.83 9.4%
EPS $0.48 $0.31 53.8%

Qudian is down over 20% after the earnings miss. The company’s CFO, Mr. Carl Yeung, remarks were optimistic but failed to appease investors — “We delivered another quarter of solid Non-GAAP net income of RMB1,061.8 million, a 52.9% year-over-year increase despite the overall industry credit deterioration driven by the macro economic environment and reduced liquidity as non-complaint player exit the credit market.”

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 7 tracked quarters, and missed expectations 1 quarters.

Analyst Expected vs Reported EPS
Quarter Expected Reported Surprise Result
Q3, 2019 $0.48 $0.46 -4.2% Missed
Q2, 2019 $0.53 $0.58 9.3% Beat
Q1, 2019 $0.38 $0.47 25.9% Beat
Q4, 2018 $0.35 $0.38 9.8% Beat
Q3, 2018 $0.29 $0.31 9.2% Beat
Q2, 2018 $0.27 $0.33 22.7% Beat
Q1, 2018 $0.17 $0.16 -4.2% Missed
Q4, 2017 $0.24 $0.27 15.9% Beat

What are your expectations from Qudian for earnings next quarter? Let us know in the comments!

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 2.6%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-08-16 $8.69 $8.92 2.6% Increase
2019-05-20 $6.84 $7.09 3.7% Increase
2019-03-18 $5.35 $5.44 1.7% Increase
2018-11-21 $4.29 $5.87 36.8% Increase

Fundamentals And Technical Analysis

Qudian is currently trading at $5.88/share, down -21.67% for the day. The company is trading at approximately 63% of its 52 week high of $9.21/share.

The share price as of close on November 17, 2019 implies a price-to-earnings (P/E) multiple of 4.2x and a forward P/E multiple of 0.5x.

Qudian’s current share price also implies a price-to-book (P/B) multiple of 1.2x. The following table summarizes some other key fundamental ratios:

Data as of November 17, 2019
Metric Value
Last Fiscal Period FY2019.Q2
Period End Date June 30, 2019
Stock Price (Current) $7.50
P/E Ratio 4.2x
P/E Ratio (Fwd) 0.5x
PEG Ratio 0.0
Total Debt to Capital (%) 20.6%
Levered Free Cash Flow zero
Enterprise Value / EBITDA 3.9x

Company Profile: Qudian Inc.

Qudian Inc. is a mid-cap stock with a market capitalization of $2.094 billion and a total enterprise value of $2.276 billion. The company operates in the Financials sector and Consumer Finance industry.

Qudian Inc. provides online small consumer credit products in the People’s Republic of China. It uses big data-enabled technologies, including artificial intelligence and machine learning to transform the consumer finance experience. The company offers small credit products, such as cash credit products; merchandise credit products to finance borrowers’ direct purchase of merchandise offered on its marketplace on installment basis; and budget auto financing products. In addition, it operates a platform for loan recommendations and referrals.

Qudian Inc. was founded in 2014 and is headquartered in Xiamen, the People’s Republic of China.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.