Value
9.7/10data confidence 67%| Component | Sub-score |
|---|---|
| P/E | 10.0 |
| P/S | 10.0 |
| Fwd P/E | 10.0 |
| Analyst target | 9.0 |
- ▸Forward P/E: 2.8x
- ▸Attractively valued
QFIN · Why this verdict
Why Qfin Holdings (QFIN) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.5/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Qfin Holdings is a high-quality credit services business trading at 3.2x forward earnings with an exceptionally strong free cash flow conversion of 195% relative to net income, but consecutive earnings misses and declining revenue of -17% have pushed the stock into a confirmed downtrend, creating a tension between fundamental value and deteriorating business momentum.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
The company converts 195% of net income into free cash flow, a ratio that indicates earnings quality far above the average credit services firm, suggesting that reported net income understates actual cash generation capacity. Quality breakdown | Free cash flow conversion remains above 150% for the next two reported annual periods, validating the earnings quality premium. | →Stable |
| CounterRevenue is declining at -17% annually, and two consecutive earnings misses suggest the high conversion ratio may reflect deferred investment rather than structural cash efficiency. | ||
Two consecutive earnings misses with average surprise of -0.1% over four quarters and revenue declining at -17% annually indicate the company is failing to meet analyst expectations, which could persist if macro credit conditions weaken further. Bear case | Earnings beats return in at least 2 of the next 3 quarters, reversing the miss streak. | ↑Improving |
| CounterThe most recent quarter (May 2026) showed a +12% positive surprise, which may signal the bottom of the miss cycle if analyst estimates have been sufficiently reset lower. | ||
With a forward P/E of 3.2x and an overall quality score of 8.1 out of 10, the stock trades at a significant discount to its peer group, offering an 82% margin of safety according to the analyst consensus target of $19.07 against the current price of $15.59. Bull case | The stock rises above $18.00 within 12 months as the valuation gap narrows. | →Stable |
| CounterA low P/E in a declining-revenue business may reflect the market correctly pricing in further earnings deterioration rather than a genuine discount. | ||
The stock is below its 200-day moving average with the moving average slope at -12.7% over 30 days, placing it in a confirmed downtrend despite strong volume accumulation as measured by the on-balance volume indicator. Momentum breakdown | The stock price rises above its 200-day moving average and sustains that level for at least 20 consecutive trading days. | ↓Deteriorating |
| CounterRising on-balance volume alongside a price downtrend can signal accumulation by informed buyers ahead of a recovery, but this pattern can persist for extended periods without resolution. | ||
The company converts 195% of net income into free cash flow, a ratio that indicates earnings quality far above the average credit services firm, suggesting that reported net income understates actual cash generation capacity.
→StableQuality breakdown
- Expectation
- Free cash flow conversion remains above 150% for the next two reported annual periods, validating the earnings quality premium.
CounterRevenue is declining at -17% annually, and two consecutive earnings misses suggest the high conversion ratio may reflect deferred investment rather than structural cash efficiency.
Two consecutive earnings misses with average surprise of -0.1% over four quarters and revenue declining at -17% annually indicate the company is failing to meet analyst expectations, which could persist if macro credit conditions weaken further.
↑ImprovingBear case
- Expectation
- Earnings beats return in at least 2 of the next 3 quarters, reversing the miss streak.
CounterThe most recent quarter (May 2026) showed a +12% positive surprise, which may signal the bottom of the miss cycle if analyst estimates have been sufficiently reset lower.
With a forward P/E of 3.2x and an overall quality score of 8.1 out of 10, the stock trades at a significant discount to its peer group, offering an 82% margin of safety according to the analyst consensus target of $19.07 against the current price of $15.59.
→StableBull case
- Expectation
- The stock rises above $18.00 within 12 months as the valuation gap narrows.
CounterA low P/E in a declining-revenue business may reflect the market correctly pricing in further earnings deterioration rather than a genuine discount.
The stock is below its 200-day moving average with the moving average slope at -12.7% over 30 days, placing it in a confirmed downtrend despite strong volume accumulation as measured by the on-balance volume indicator.
↓DeterioratingMomentum breakdown
- Expectation
- The stock price rises above its 200-day moving average and sustains that level for at least 20 consecutive trading days.
CounterRising on-balance volume alongside a price downtrend can signal accumulation by informed buyers ahead of a recovery, but this pattern can persist for extended periods without resolution.
Per-dimension breakdown
Quality
8.1/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 7.1 |
| ROA | 5.5 |
| Gross margin | 7.4 |
| Op margin | 10.0 |
| Net margin | 10.0 |
| Current ratio | 7.7 |
| FCF quality | 10.0 |
| Moat | 7.2 |
| Piotroski F | 7.8 |
- ▸Strong margins: 28%
- ▸Excellent cash conversion: 195% FCF/NI
- ▸Strong Piotroski F-Score: 7/9
- ▸High-quality business
Growth
0.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 0.0 |
- ▸Declining revenue: -17%
Momentum
2.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 3.0 |
| MACD | 0.9 |
| OBV | 5.0 |
| MA position | 1.0 |
| Volume | 0.0 |
- ▸Capitulation risk (RSI 24, below 200MA)
- ▸Below 200-MA, MA slope -10.9%/30d — confirmed downtrend
Sentiment
7.4/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 7.2 |
| Price target | 9.8 |
| erm sentiment | 5.0 |
- ▸Analyst upside: 67%
Insider
3.8/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 3.4 |
| notable moves | 3.0 |
- ▸Negligible insider buying — $57,640 (0.004% of mkt cap)
Peer rank
6.4/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 9.4 |
| quality rank | 6.3 |
| growth rank | 0.6 |
- ▸Attractive P/E vs peers
- ▸Conservative debt levels
Technical
5.3/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 7.2 |
| support resistance | 7.9 |
| 52w position | 0.0 |
| gap | 6.0 |
Risk (lower is worse)
6.9/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 8.6 |
| days to cover | 9.2 |
| volatility | 0.0 |
| put call | 10.0 |
| implied vol | 1.7 |
| beta | 9.6 |
| debt equity | 9.5 |
- ▸High IV: 70%
Catalyst
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 2.4 |
| dividend safety | 7.5 |
- ▸Earnings concerns: 2B/2M
- ▸Dividend aristocrat: 11.8% yield
How the verdict was assembled
Engine trigger
Exceptional fundamentals but wait for better entry timing. | News modifier -1 (STRONG_BUY_WAIT → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_B_EXCEPTIONAL_WAIT|L3:NEWS_MOD=-1Passed (7)
- ASYMMETRY:4.0>=1.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:22d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:2.0<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (0)
none
Reward-to-Risk
3.97
Upside
+45.3%
Downside
11.4%
Sizing output
AVOID
SetupFalling Knife — Death cross, below all MAs, RSI 24, MACD bearish
EdgeTemporary headwind — High quality (8.1) with weak momentum (2.0)
SuitabilitySpeculative — Drawdown -69% (>40% off 52w high)
Investment implication
The HOLD_IF_HOLDING verdict reflects the MOMENTUM gate's 2.0<4.5 outcome against Value at 9.7 and asymmetric R:R of 3.97.
The strongest dimensions are Value at 9.7, Quality at 8.1, and Sentiment at 7.4; the weakest are Growth at 0.0, Momentum at 2.0, and Insider at 3.8. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of 3.97 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Exceptional Free Cash Flow Quality
Trip ifFree cash flow conversion falls below 100% of net income in any reported annual period.
- P2Deep Discount Forward Valuation
Trip ifThe stock price falls below $13.00, increasing the downside risk beyond 7% from the current stop-loss level.
- P3Earnings Miss Trend Risk
Trip ifEPS surprise falls below -10% in at least 2 of the next 3 reported quarters.
- P4Confirmed Price Downtrend
Trip ifThe 200-day moving average slope declines by more than 15% over any 30-day window.