Critical Analysis: Bitfarms (NASDAQ:BITF) versus Qudian (NYSE:QD)

Qudian (NYSE:QD) and Bitfarms (NASDAQ:BITF) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Analyst Recommendations

This is a summary of current ratings and price targets for Qudian and Bitfarms, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Qudian	0	0	0	0	N/A
Bitfarms	0	1	4	0	2.80

Bitfarms has a consensus price target of $3.66, indicating a potential upside of 78.54%. Given Bitfarms’ higher possible upside, analysts clearly believe Bitfarms is more favorable than Qudian.

Valuation & Earnings

This table compares Qudian and Bitfarms”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Qudian	$160.33 million	2.28	$5.51 million	($0.30)	-6.07
Bitfarms	$172.70 million	4.86	-$104.04 million	($0.38)	-5.39

Qudian has higher earnings, but lower revenue than Bitfarms. Qudian is trading at a lower price-to-earnings ratio than Bitfarms, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Qudian has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, Bitfarms has a beta of 3.64, suggesting that its share price is 264% more volatile than the S&P 500.

Institutional & Insider Ownership

8.1% of Qudian shares are held by institutional investors. Comparatively, 20.6% of Bitfarms shares are held by institutional investors. 25.7% of Qudian shares are held by company insiders. Comparatively, 9.5% of Bitfarms shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Qudian and Bitfarms’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Qudian	-134.42%	-2.35%	-2.21%
Bitfarms	-62.79%	-18.94%	-16.08%

Summary

Bitfarms beats Qudian on 8 of the 13 factors compared between the two stocks.

About Qudian

Qudian Inc. operates as a consumer-oriented technology company in the People's Republic of China. The company engages in the operation of online platforms to provide small consumer credit products. It also provides technology development and services; research and development services; and delivery services. The company was founded in 2014 and is headquartered in Xiamen, the People's Republic of China.

About Bitfarms

Bitfarms Ltd. engages in the mining of cryptocurrency coins and tokens in Canada, the United States, Paraguay, and Argentina. It owns and operates server farms that primarily validates transactions on the Bitcoin Blockchain and earning cryptocurrency from block rewards and transaction fees. The company also provides electrician services to commercial and residential customers in Quebec, Canada. It also undertakes hosting of third-party mining hardware. The company was founded in 2017 and is based in Toronto, Canada.