Vipshop (NYSE:VIPS) & Itochu (OTCMKTS:ITOCY) Critical Review

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

Risk & Volatility

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Itochu and Vipshop, as provided by MarketBeat.

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

Vipshop has a consensus target price of $17.16, indicating a potential upside of 34.30%. Given Vipshop’s higher possible upside, analysts plainly believe Vipshop is more favorable than Itochu.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itochu	$98.47 billion	1.17	$5.63 billion	$0.93	15.61
Vipshop	$15.15 billion	0.40	$1.04 billion	$3.02	4.23

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

Itochu pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. Vipshop pays an annual dividend of $0.60 per share and has a dividend yield of 4.7%. Itochu pays out 17.2% 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.

Institutional & Insider Ownership

0.1% of Itochu shares are held by institutional investors. Comparatively, 48.8% of Vipshop shares are held by institutional investors. 29.5% of Vipshop shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

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

Summary

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

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.

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.