Financial Analysis: Vipshop (VIPS) versus Overstock.com (OSTK)

Vipshop (NYSE: VIPS) and Overstock.com (NASDAQ:OSTK) are both computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Profitability

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

Net Margins Return on Equity Return on Assets
Vipshop 2.67% 25.75% 8.08%
Overstock.com -6.30% -49.57% -19.40%

Risk and Volatility

Vipshop has a beta of 2.27, suggesting that its share price is 127% more volatile than the S&P 500. Comparatively, Overstock.com has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.

Institutional and Insider Ownership

48.0% of Vipshop shares are held by institutional investors. Comparatively, 58.9% of Overstock.com shares are held by institutional investors. 24.2% of Overstock.com shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Vipshop 0 3 9 0 2.75
Overstock.com 0 0 2 0 3.00

Vipshop currently has a consensus target price of $16.88, indicating a potential upside of 9.21%. Overstock.com has a consensus target price of $62.50, indicating a potential upside of 68.69%. Given Overstock.com’s stronger consensus rating and higher probable upside, analysts clearly believe Overstock.com is more favorable than Vipshop.

Earnings & Valuation

This table compares Vipshop and Overstock.com’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Vipshop $11.21 billion 0.91 $282.06 million $0.58 26.66
Overstock.com $1.74 billion 0.63 -$109.87 million ($1.81) -20.47

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

Summary

Vipshop beats Overstock.com on 10 of the 14 factors compared between the two stocks.

About Vipshop

Vipshop Holdings Limited, through its subsidiaries, operates as an online discount retailer for various brands in the People's Republic of China. It offers a range of branded products, including women's apparel, such as casual wear, jeans, dresses, outerwear, swimsuits, lingerie, pajamas, and maternity clothes; men's apparel comprising casual and smart-casual T-shirts, polo shirts, jackets, pants, and underwear; women and men shoes for casual and formal occasions; and accessories consisting of belts, fashionable jewelry, watches, and glasses for women and men. The company also provides handbags, such as purses, satchels, duffel bags, and wallets; apparel, gear and accessories, furnishings and decor, toys, and games for boys, girls, infants, and toddlers of all age groups; sports apparel, and sports gear, and footwear for tennis, badminton, soccer, and swimming; and skin care and cosmetic products, including cleansers, lotions, face and body creams, face masks, sunscreen, foundations, lipsticks, eye shadows, and nail polish. In addition, it offers home furnishing products comprising bedding and bath products, home decors, and dining and tabletop items; small household appliances; designer apparel, footwear and accessories; and snacks, health supplements, and occasion-based gifts, such as chocolates, moon-cakes, and tea. Further, the company provides consumer financing, supply chain financing, and wealth management services. The company provides its branded products through its vipshop.com, vip.com, and lefeng.com Websites, as well as through its cellular phone application. Vipshop Holdings Limited was founded in 2008 and is headquartered in Guangzhou, the People's Republic of China.

About Overstock.com

Overstock.com, Inc. operates as an online retailer in the United States. It operates in two segments, Direct and Partner. The company offers home and garden products, including furniture, home decor, garden and patio, kitchen and dining, bedding, home improvement, housewares, and other related products; jewelry and watches; clothing and accessories; electronics and computers; and other products. It also provides handcrafted products; new, used, and certified pre-owned cars; and loans, credit cards, and insurance, as well as access links to automated financial advisory and discounted stock brokerage services. The company sells its products and services through its Internet Websites located at overstock.com, o.co, and o.biz, as well as through third party logistics providers to international customers. The company was formerly known as D2-Discounts Direct and changed its name to Overstock.com, Inc. in October 1999. Overstock.com, Inc. was founded in 1997 and is headquartered in Midvale, Utah.

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