Reviewing Vipshop (NYSE:VIPS) and Itochu (OTCMKTS:ITOCY)

Vipshop (NYSE:VIPS) and Itochu (OTCMKTS:ITOCY) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Analyst Ratings

This is a summary of current recommendations and price targets for Vipshop and Itochu, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vipshop	2	4	3	1	2.30
Itochu	0	0	1	3	3.75

Vipshop currently has a consensus price target of $17.16, indicating a potential upside of 36.43%. Given Vipshop’s higher probable upside, analysts plainly believe Vipshop is more favorable than Itochu.

Institutional & Insider Ownership

48.8% of Vipshop shares are owned by institutional investors. Comparatively, 0.1% of Itochu shares are owned by institutional investors. 29.5% of Vipshop shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

Vipshop has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, Itochu has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vipshop	$15.15 billion	0.40	$1.04 billion	$3.02	4.16
Itochu	$98.47 billion	1.17	$5.63 billion	$0.93	15.63

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

Dividends

Vipshop pays an annual dividend of $0.60 per share and has a dividend yield of 4.8%. Itochu pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. Vipshop pays out 19.9% of its earnings in the form of a dividend. Itochu pays out 17.2% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vipshop	9.88%	12.63%	7.09%
Itochu	N/A	N/A	N/A

Summary

Vipshop beats Itochu on 9 of the 16 factors compared between the two stocks.

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.

About Itochu

ITOCHU Corporation engages in trading and importing/exporting various products worldwide. The company’s Textile segment produces and sells raw materials, threads, and textiles; and garments, home furnishings, and industrial materials, as well as trades in industrial textile and lifestyle products. Its Machinery segment engages in the plants, bridges, railways, and other infrastructure; power generation, transmission, transformation, and sale; water, environment and waste-related; ship trading; renewable and alternative energy; and waste recycling businesses. The company’s Metals & Minerals segment engages in development of metal and mineral resource; processing and steel products; trading of iron ore, coal, pig iron and ferrous raw materials, non-ferrous and light metals, steel products, nuclear fuels, and greenhouse gas emissions; and recycling and waste treatment activities. Its Energy & Chemicals segment trades in crude oil, petroleum products, LPG, LNG, natural gas, hydrogen, organic and inorganic chemicals, functional food, synthetic resins, packaging materials, household goods, fine chemicals, pharmaceuticals, and electronic materials, as well as engages in the solar and biomass power generation, electricity trading, and the energy storage cell businesses. The company’s Food segment produces, distributes, and retails food products. Its General Products & Realty segment produces and sells paper, pulp, natural rubber, tire, and wood products and materials; develops and operates real estate properties, such as housing, logistics facilities, and other projects; and offers logistics services. The company’s ICT & Financial Business segment offers IT, Internet related and venture capital, mobile telephone equipment, BPO, broadcasting and communications, entertainment and content, healthcare and preventive medicine outsourcing, and financial and insurance brokerage services. The company was founded in 1858 and is headquartered in Tokyo, Japan.