FUTU

We rate Futu Holdings Ltd (FUTU) as a Hold with a composite score of 60.9/100 at a current price of $144.01. The stock presents a mixed quantitative picture — neither compelling enough to warrant new accumulation nor weak enough to justify selling for existing holders. Our factors are split, and the overall profile suggests patience is warranted.

The rating is primarily driven by strength in value (95th percentile) and quality (90th percentile), which together account for the majority of the composite score. Offsetting weakness in stability (21th percentile) and investment (28th percentile) tempers our overall conviction. We assign a Wide Moat rating (74/100), High uncertainty, and Exemplary capital allocation.

Key items to watch: sustainability of the current growth rate. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Futu Holdings Ltd holds a mid-tier position (#26 of 50) within the Finance, Insurance, And Real Estate sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 60.9/100 places it at rank #601 in our full 7,333-stock universe. With a $11.0B market capitalization, Futu Holdings Ltd operates at meaningful scale within the Finance, Insurance, And Real Estate sector, providing competitive advantages in distribution, procurement, and customer reach.

Revenue is growing at 37%, though momentum at the 51th percentile suggests the market has not yet fully recognized this trajectory. This potential disconnect between fundamental improvement and market recognition could represent an opportunity for patient investors if the growth trend persists.

The margin cascade tells an important story: gross margins of 82% (+5.5pp vs sector) narrow to operating margins of 49% (+31.7pp vs sector) and net margins of 40.0%, yielding a gross-to-net conversion rate of 49%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $144.01, Futu Holdings Ltd appears undervalued relative to its fundamentals. Our value factor score of 95/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The stock screens as attractively priced on a majority of these measures, suggesting the market may be underappreciating the underlying fundamentals.

The stock currently trades at a P/E of 231.2x (a 1838% premium to the sector median of 11.9x), EV/EBITDA of 5.8x (discounted to peers), P/B of 6.0x, P/S of 3.1x. The above-sector P/E multiple suggests the market is pricing in superior growth or quality, which our analysis partially supports given strong quality metrics.

We assign a High uncertainty rating to Futu Holdings Ltd. Key risk factors include elevated market sensitivity (beta of 1.55), below-average price stability (21th percentile), elevated valuation multiple (P/E 231.2x) that leaves limited margin for error. The wide range of potential outcomes widens our fair value estimate and increases the possibility of permanent capital impairment. Investors considering this name should size positions accordingly and demand a meaningful margin of safety before initiating.

Specific risk factors that inform our assessment include: elevated market sensitivity (beta of 1.55); below-average price stability (21th percentile); elevated valuation multiple (P/E 231.2x) that leaves limited margin for error. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 21th percentile and quality factor at the 90th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: healthy gross margins of 82% provide a buffer against cost pressures; conservative leverage (0% D/E) limits balance sheet risk; a 2.50% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile warrants caution and disciplined position management.

We rate Futu Holdings Ltd's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 77.6%, disciplined leverage (0% D/E), a 2.50% dividend yield. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Futu Holdings Ltd meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 2.50% dividend yield, and the combination of 13.7% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Futu Holdings Ltd receives a Hold rating with a composite score of 60.9/100 (rank #601 of 7,333). Our quantitative framework assigns a Wide Moat (74/100, trend: stable), High uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 57/100.

Our analysis supports a neutral stance on Futu Holdings Ltd. While the quantitative profile is not weak enough to warrant selling, it lacks the multi-factor strength required for a buy recommendation. Existing holders should maintain positions and monitor for catalysts — either fundamental improvement or valuation compression — that would shift the risk-reward balance.