Key Points
LX is soaring on news of a $50 million share buyback program and CEO confidence.
The CEO also announced he would buy up to $10 million worth of stock over the next 12 months.
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Out of the gate, shares of LexinFintech (NASDAQ: LX) are up about 12%, or 80 cents.
It’s up on news of a $50 million share buyback program. It’s also up on CEO confidence with the announcement of insider buying.
“The Share Repurchase Program demonstrates our confidence in Lexin’s business fundamentals and growth opportunities,” said Jay Wenjie Xiao, Chairman and CEO of Lexin. “We believe this is an attractive way of deploying our capital and returning value to shareholders, and we will continue to evaluate additional opportunities to enhance shareholder returns.”
Buybacks often indicate management’s belief that the stock is undervalued, as compared to its future growth. Also, by buying back stock, LX will increase earnings per share and could boost the share price. All of which could help create more value for shareholders.
Fueling even more confidence, Xiao also announced he would buy up to $10 million worth of stock over the next 12 months.
Recent earnings haven’t been too shabby either.
In fact, according to CFO James Zheng, “Our first-quarter financial results mark another key milestone in our net income target. In the quarter, net income exceeded RMB430 million, representing a 19% quarter-over-quarter and 113% year-over-year increase.”
“Net profit take rate was 1.58%, calculated as net income divided by average loan balance, advancing by 27 basis points compared to the previous quarter. The strong net income growth was underpinned by sustained improvements in asset quality, alongside a further reduction in funding costs.”
Making the stock even more attractive, the company raised its cash dividend payout ratio from 20% to 25%. Management added that it’s confident in achieving significant year-over-year growth in net income, reaffirming its full-year net income guidance.
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