Comparing Vipshop (NYSE:VIPS) and Alibaba Group (NYSE:BABA)

Alibaba Group (NYSE:BABA) and Vipshop (NYSE:VIPS) are both consumer discretionary companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, valuation, earnings, risk, analyst recommendations and profitability.

Volatility & Risk

Alibaba Group has a beta of 0.47, meaning that its share price is 53% less volatile than the S&P 500. Comparatively, Vipshop has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.

Institutional and Insider Ownership

13.5% of Alibaba Group shares are owned by institutional investors. Comparatively, 48.8% of Vipshop shares are owned by institutional investors. 12.5% of Alibaba Group shares are owned by insiders. Comparatively, 29.5% of Vipshop shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Alibaba Group pays an annual dividend of $1.03 per share and has a dividend yield of 0.9%. Vipshop pays an annual dividend of $0.60 per share and has a dividend yield of 4.7%. Alibaba Group pays out 24.9% of its earnings in the form of a dividend. Vipshop pays out 19.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Vipshop is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Alibaba Group and Vipshop, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alibaba Group	0	6	13	2	2.81
Vipshop	2	4	3	1	2.30

Alibaba Group currently has a consensus price target of $182.89, suggesting a potential upside of 64.22%. Vipshop has a consensus price target of $17.16, suggesting a potential upside of 33.15%. Given Alibaba Group’s stronger consensus rating and higher probable upside, analysts plainly believe Alibaba Group is more favorable than Vipshop.

Profitability

This table compares Alibaba Group and Vipshop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Alibaba Group	7.00%	4.79%	2.80%
Vipshop	9.88%	12.63%	7.09%

Earnings & Valuation

This table compares Alibaba Group and Vipshop”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alibaba Group	$1,044.97 billion	0.27	$15.02 billion	$4.13	26.97
Vipshop	$105.13 billion	0.06	$1.04 billion	$3.02	4.27

Alibaba Group has higher revenue and earnings than Vipshop. Vipshop is trading at a lower price-to-earnings ratio than Alibaba Group, indicating that it is currently the more affordable of the two stocks.

Summary

Alibaba Group beats Vipshop on 9 of the 17 factors compared between the two stocks.

About Alibaba Group

Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally. The company operates through seven segments: China Commerce, International Commerce, Local Consumer Services, Cainiao, Cloud, Digital Media and Entertainment, and Innovation Initiatives and Others. It operates Taobao, a digital retail platform; Tmall, a third-party online and mobile commerce platform; Alimama, a monetization platform; 1688.com and Alibaba.com, which are online wholesale marketplaces; AliExpress, a retail marketplace; Lazada, Trendyol, and Daraz that are e-commerce platforms; Freshippo, a retail platform for groceries and fresh goods; and Tmall Global, an import e-commerce platform. The company also operates Cainiao Network logistic services platform; Ele.me, an on-demand delivery and local services platform; Koubei, a restaurant and local services guide platform; and Fliggy, an online travel platform. In addition, it offers pay-for-performance, in-feed, and display marketing services; and Taobao Ad Network and Exchange, a real-time online bidding marketing exchange. Further, the company provides elastic computing, storage, network, security, database, big data, and IoT services; and hardware, software license, software installation, and application development and maintenance services. Additionally, it operates Youku, an online video platform; Quark, a platform for information search, storage, and consumption; Alibaba Pictures and other content platforms that provide online videos, films, live events, news feeds, literature, music, and others; Amap, a mobile digital map, navigation, and real-time traffic information app; DingTalk, a business efficiency mobile app; and Tmall Genie smart speaker. The company was incorporated in 1999 and is based in Hangzhou, the People's Republic of China.

About Vipshop

Vipshop Holdings Limited operates online platforms in the People's Republic of China. It operates in Vip.com, Shan Shan Outlets, and Others segments. The company offers womenswear, menswear, sportswear and sporting goods, shoes and bags, accessories, baby and children products, skincare and cosmetics, home goods and other lifestyle products, and supermarket products. It also provides internet finance services, including consumer and supplier financing. In addition, the company engages in warehousing, retail business, product procurement, and software development and information technology support activities. The company provides branded products through its vip.com and vipshop.com online platforms, as well as through retail stores. Vipshop Holdings Limited was founded in 2008 and is headquartered in Guangzhou, the People's Republic of China.