Muted Lending, High Costs To Mar Hexindai (HX) Q1 Earnings

Hexindai Inc. (NASDAQ:HX) is slated to announce first-quarter fiscal 2020 (ended Jun 30, 2019) results on Sep 18, before market open. The company’s quarterly earnings and revenues are expected to decline year over year.

The China-based company’s fourth-quarter fiscal 2019 results reflected impact from an increase in expenses along with lower revenues and loans.

The Zacks Consensus Estimate for earnings for the fiscal first quarter indicates a 100% plunge from the year-ago reported number. Also, the consensus estimate for sales is $8.42 million, suggesting a decline of 83.7%.

Hexindai Inc. Sponsored ADR Price and Consensus

Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to influence fiscal first-quarter results.

Factors at Play

Lower Loans Volume: Heightened trade tensions with the United States are likely to have resulted in slowdown in consumer demand during the to-be-reported quarter. Thus, loan balance is likely to decrease.

Revenues Might Decline: With lower loan origination volume, the company’s loan facilitation income and other service income are likely to decline, thereby affecting top-line growth.

Asset Quality Likely to Deteriorate: The company’s asset quality is likely to have worsened in the to-be-reported quarter. The key reason being Hexindai primarily caters to demands of the middle-class in China, who are often considered as risky borrowers, and are more exposed to any economic downturn than larger companies.

Slight rise in expenses: Hexindai has been facing rise in operating expenses over the past several quarters. The same trend is likely to have persisted in the to-be-reported quarter as the company continues to invest in expansion strategies.

Earnings Whispers

Now, let’s check what our quantitative model predicts.

According to our quantitative model, it cannot be conclusively predicted if Hexindai will be able to beat the Zacks Consensus Estimate this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: The Earnings ESP for Hexindai is 0.00%.

Zacks Rank: It has a Zacks Rank of 3. While this increases the predictive power of the ESP, we also need a positive Earnings ESP to be sure of an earnings surprise call.

Stocks to Consider

Globe Life Inc. (NYSE:GL) has been witnessing upward estimate revisions over the past 60 days. Moreover, this Zacks Rank #2 (Buy) stock has rallied 25.8% so far this year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Orix Corp Ads (NYSE:IX) has been witnessing upward estimate revisions over the past 60 days. Additionally, the stock has risen 10.1% so far this year. It currently carries a Zacks Rank #2.

Houlihan Lokey, Inc. (NYSE:HLI) earnings estimates have remained stable over the past 30 days. The company’s shares have gained 26.4% so far this year. At present, it carries a Zacks Rank of 2.

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