Financial Analysis: eBay (NASDAQ:EBAY) vs. Vipshop (NYSE:VIPS)

Vipshop (NYSE:VIPS) and eBay (NASDAQ:EBAY) are both consumer discretionary companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Analyst Recommendations

This is a summary of recent ratings and target prices for Vipshop and eBay, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vipshop	2	4	3	1	2.30
eBay	2	16	13	2	2.45

Vipshop presently has a consensus target price of $17.16, suggesting a potential upside of 35.77%. eBay has a consensus target price of $115.84, suggesting a potential downside of 2.34%. Given Vipshop’s higher probable upside, equities research analysts clearly believe Vipshop is more favorable than eBay.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vipshop	$105.13 billion	0.06	$1.04 billion	$3.02	4.18
eBay	$12.01 billion	4.40	$2.03 billion	$4.83	24.56

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

Profitability

This table compares Vipshop and eBay’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%
eBay	18.50%	47.88%	12.38%

Insider and Institutional Ownership

48.8% of Vipshop shares are held by institutional investors. Comparatively, 87.5% of eBay shares are held by institutional investors. 29.5% of Vipshop shares are held by insiders. Comparatively, 0.7% of eBay shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Vipshop pays an annual dividend of $0.60 per share and has a dividend yield of 4.7%. eBay pays an annual dividend of $1.24 per share and has a dividend yield of 1.0%. Vipshop pays out 19.9% of its earnings in the form of a dividend. eBay pays out 25.7% 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. eBay has raised its dividend for 7 consecutive years. Vipshop is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Vipshop has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, eBay has a beta of 1.33, meaning that its share price is 33% more volatile than the S&P 500.

Summary

eBay beats Vipshop on 13 of the 18 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 eBay

eBay Inc., together with its subsidiaries, operates marketplace platforms that connect buyers and sellers in the United States, the United Kingdom, China, Germany, and internationally. The company’s marketplace platform includes its online marketplace at ebay.com, off-platform businesses, and the eBay suite of mobile apps. Its platforms enable users to list, sell, and buy various products. The company was founded in 1995 and is headquartered in San Jose, California.