ZK International vs. Jiayin Group: Which NFT Stock is a Better Investment?

Based in Shanghai, China, online individual finance platform Jiayin Group Inc. (JFIN) connects individual investors and borrowers. The company operates a secure and open platform that facilitates transparent, secure, and fast connections between investors and borrowers. On the other hand, ZK International Group Co., Ltd. (ZKIN), also based in China, engages in the designing, producing, and selling of double-press thin-walled stainless steel, carbon steel, and single-press tubes and fittings. It also offers carbon and stainless steel strips, carbon and stainless steel pipes, light gauge stainless steel pipes, and pipe connections and fittings.

Despite investors being skeptical about the actual value of non-fungible tokens (NFTs), monthly sales on OpenSea reached $3.4 billion in August, an all-time high, according to data from Dune Analytics. Last month, the clipart of rock was sold for 400 ether. While NFT trading volume has declined this month, growing interest in digital collectibles should drive the NFT market’s growth. So, NFT stocks JFIN and ZKIN should benefit.

JFIN has gained 36.1% over the past nine months, while ZKIN has returned 33%. Also, JFIN’s 44.3% gains year-to-date are significantly higher than ZKIN’s 15.1% returns. Moreover, JFIN is the clear winner with 8.4% gains versus ZKIN’s negative returns in terms of the past month's performance.

But which of these two stocks is a better buy now? Let’s find out.

Latest Developments

On August 25, Mr. Yan Dinggui, JFIN's Founder, Director, and CEO, said, “Looking ahead, we will continue broadening partnerships with more funding partners to diversify our funding resources while maintaining excellence in our risk management. We are confident our robust growth will sustain and positive trajectory in both loan growth, and asset quality will continue.”

On September 23, ZKIN announced that its subsidiary xSigma Collectibles Limited has entered into a general partnership with ACES, Inc., to launch NFTs for their athletes on the MaximNFT platform. Jon Orlando, the CEO at MaximNFT, said, “This is a serious step and a great partnership for MaximNFT to take on. ACES is one of the most powerful baseball agencies, and we look forward to revolutionizing the industry of sports collectibles together with them.”

Recent Financial Results

JFIN’s net revenue increased 100.9% year-over-year to $76.23 million for the fiscal second quarter ended June 30, 2021. Its operating income grew 211.7% year-over-year to $23.17 million, while its net income increased 208.5% year-over-year to $19.64 million. Also, its EPS came in at $0.09, up 210.5% year-over-year.

ZKIN’s net revenue decreased 5% year-over-year to $42.17 billion for the six months ended March 31, 2021. However, the company’s operating expenses grew 121.8% year-over-year to $6.35 billion. In comparison, its net loss came in at $1.92 billion compared to a net income of $90.33 million in the year-ago period. Also, its loss per share came in at $0.03 compared to an EPS of $0.01 in the prior-year period.

Profitability

JFIN’s trailing-12-month revenue is 2.75 times what ZKIN generates. Moreover, JFIN is more profitable, with a gross profit margin of 82.46% compared to ZKIN’s 6.13%.

Furthermore, JFIN’s ROA of 41.17% compares to ZKIN’s negative value.

Valuation

In terms of the trailing-12-month P/S ratio, JFIN is currently trading at 0.90x, 50% higher than ZKIN’s 0.60x. Moreover, JFIN’s trailing-12-month EV/S of 0.84x is 6.3% higher than ZKIN’s 0.79x.

Though JFIN looks more expensive than ZKIN, it’s worth paying this premium considering JFIN’s significantly higher profitability.

POWR Ratings

JFIN has an overall rating of A, which equates to a Strong Buy in our proprietary POWR Ratings system. On the other hand, ZKIN has an overall rating of D, which translates to a Sell. The POWR Ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.

JFIN has a grade of A for Sentiment, in sync with favorable analyst sentiment. On the other hand, ZKIN has a D grade for Sentiment, consistent with unfavorable analyst sentiment.

JFIN also has a grade of B for Quality. This is justified given JFIN's 46.37% trailing-12-month ROTA, higher than the industry average of 1.28%. On the other hand, ZKIN has a Quality grade of F, in sync with its negative trailing-12-month ROTA, compared to the industry average of 5.07%.

Of the 103 stocks in the Financial Services (Enterprise) industry, JFIN is ranked #3. However, ZKIN is ranked #32 of 33 stocks in the Steel industry.

Beyond what I’ve stated above, we have also rated the stocks for Growth, Value, Stability, and Momentum. Click here to view all the JFIN ratings. Also, get all the ZKIN ratings here.

The Winner

With increasing technological advances in the blockchain space and growing interest in digital collectibles, the NFT market is expected to continue growing in the upcoming months. Amid this backdrop, it could be wise to bet on JFIN now because of its better financials and higher profitability.

Our research shows that odds of success increase when one invests in stocks with an Overall Rating of Strong Buy or Buy. View all the other top-rated stocks in the Financial Services (Enterprise) industry here. Also, click here to access all the top-rated stocks in the Steel industry.

JFIN shares were unchanged in after-hours trading Wednesday. Year-to-date, JFIN has gained 27.21%, versus a 17.34% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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