AFRM vs. ERIC: A Head-to-Head Stock Comparison

Company Overview

ERIC’s market capitalization of 28.89 billion USD is significantly greater than AFRM’s 19.01 billion USD, highlighting its more substantial market valuation.

AFRM’s beta of 3.58 points to significantly higher volatility compared to ERIC (beta: 0.44), suggesting AFRM has greater potential for both gains and losses relative to market movements.

ERIC is an American Depositary Receipt (ADR), allowing U.S. investors direct exposure to its non-U.S. operations. AFRM, on the other hand, is a domestic entity.

Performance Comparison

This chart compares the performance of AFRM and ERIC over the past year by tracking the growth of an initial $10,000 investment in each (starting one year ago).

Data is adjusted for dividends and splits.

Valuation Metrics Comparison

This section compares the market valuation of AFRM and ERIC. Key takeaways regarding their valuation, when viewed within their industry context, are presented in the commentary that follows.

• AFRM’s Price-to-Earnings (P/E) ratio of -307.00 indicates negative earnings, signaling current unprofitability. ERIC, with a very high P/E ratio of 171.54, appears to have a valuation that either is significantly stretched or reflects high expectations for substantial future growth.
• AFRM’s Forward PEG ratio of -1.67 and ERIC’s Forward PEG ratio of -59.62 are both in the negative range. For AFRM, a negative PEG ratio often stems from negative current earnings or forecasts of declining earnings, making its valuation difficult to assess relative to growth. Similarly, ERIC’s negative PEG suggests underlying issues with profitability or growth expectations, raising questions about its stock price compared to future prospects.

Dividend Comparison

AFRM currently offers no dividend yield, suggesting it may be reinvesting available cash back into the business for future growth, while ERIC provides a 3.36% dividend yield, offering investors a component of income return.

Financial Strength Metrics Comparison

This section evaluates the financial strength of AFRM and ERIC. Noteworthy observations on their financial resilience, considered from an industry perspective, are detailed in the points that follow.

• AFRM’s Debt-to-Equity (D/E) ratio of 2.56 is very high. This indicates that the company is significantly financed by debt, which can amplify returns but also substantially increases its financial risk profile and vulnerability to earnings fluctuations.
• AFRM’s Interest Coverage Ratio (ICR) of -0.24 is negative. This implies its operating earnings are insufficient to meet its interest expenses, a serious situation that threatens its financial stability and capacity to honor debt commitments.