Comparing Alibaba Group (NYSE:BABA) and Booking (NASDAQ:BKNG)

Alibaba Group (NYSE:BABA) and Booking (NASDAQ:BKNG) are both large-cap retail/wholesale companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.

Dividends

Alibaba Group pays an annual dividend of $0.95 per share and has a dividend yield of 0.7%. Booking pays an annual dividend of $1.68 per share and has a dividend yield of 1.1%. Alibaba Group pays out 17.9% of its earnings in the form of a dividend. Booking pays out 22.1% 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. Booking has increased its dividend for 1 consecutive years. Booking is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Alibaba Group and Booking”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Alibaba Group	$148.40 billion	2.28	$17.93 billion	$5.30	26.62
Booking	$26.92 billion	4.45	$5.40 billion	$7.60	20.33

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

Insider and Institutional Ownership

13.5% of Alibaba Group shares are held by institutional investors. Comparatively, 92.4% of Booking shares are held by institutional investors. 12.5% of Alibaba Group shares are held by insiders. Comparatively, 0.2% of Booking shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Alibaba Group and Booking, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alibaba Group	1	4	16	2	2.83
Booking	0	8	28	1	2.81

Alibaba Group currently has a consensus price target of $189.00, indicating a potential upside of 33.97%. Booking has a consensus price target of $227.14, indicating a potential upside of 47.03%. Given Booking’s higher probable upside, analysts plainly believe Booking is more favorable than Alibaba Group.

Volatility and Risk

Alibaba Group has a beta of 0.5, suggesting that its share price is 50% less volatile than the S&P 500. Comparatively, Booking has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alibaba Group	10.31%	4.82%	2.82%
Booking	22.23%	-117.14%	25.85%

Summary

Booking beats Alibaba Group on 10 of the 18 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 Booking

Booking Holdings Inc, formerly The Priceline Group Inc., is a provider of travel and restaurant online reservation and related services. The Company, through its online travel companies (OTCs), connects consumers wishing to make travel reservations with providers of travel services across the world. It offers consumers an array of accommodation reservations (including hotels, bed and breakfasts, hostels, apartments, vacation rentals and other properties) through its Booking.com, priceline.com and agoda.com brands. Its other brands include KAYAK, Rentalcars.com and OpenTable, Inc. (OpenTable). As of December 31, 2016, Booking.com offered accommodation reservation services for over 1,115,000 properties in over 220 countries and territories on its various Websites and in over 40 languages, which included over 568,000 vacation rental properties (updated property counts were available on the Booking.com Website).