Comparing Vipshop Holdings Limited (VIPS) and Costco Wholesale Corporation (NASDAQ:COST)

Costco Wholesale Corporation (NASDAQ: COST) and Vipshop Holdings Limited (NYSE:VIPS) are both mid-cap retail/wholesale companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Dividends

Costco Wholesale Corporation pays an annual dividend of $2.00 per share and has a dividend yield of 1.3%. Vipshop Holdings Limited does not pay a dividend. Costco Wholesale Corporation pays out 34.7% of its earnings in the form of a dividend. Costco Wholesale Corporation has increased its dividend for 13 consecutive years.

Institutional & Insider Ownership

73.9% of Costco Wholesale Corporation shares are held by institutional investors. Comparatively, 68.1% of Vipshop Holdings Limited shares are held by institutional investors. 0.7% of Costco Wholesale Corporation shares are held by insiders. Comparatively, 29.5% of Vipshop Holdings Limited shares are held 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.

Profitability

This table compares Costco Wholesale Corporation and Vipshop Holdings Limited’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Costco Wholesale Corporation 2.06% 20.45% 6.88%
Vipshop Holdings Limited 3.17% 42.46% 10.30%

Analyst Recommendations

This is a summary of recent ratings and target prices for Costco Wholesale Corporation and Vipshop Holdings Limited, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Costco Wholesale Corporation 0 8 20 0 2.71
Vipshop Holdings Limited 2 3 7 0 2.42

Costco Wholesale Corporation presently has a consensus target price of $179.46, suggesting a potential upside of 14.25%. Vipshop Holdings Limited has a consensus target price of $14.44, suggesting a potential upside of 46.45%. Given Vipshop Holdings Limited’s higher probable upside, analysts plainly believe Vipshop Holdings Limited is more favorable than Costco Wholesale Corporation.

Volatility & Risk

Costco Wholesale Corporation has a beta of 0.93, indicating that its share price is 7% less volatile than the S&P 500. Comparatively, Vipshop Holdings Limited has a beta of 1.9, indicating that its share price is 90% more volatile than the S&P 500.

Valuation and Earnings

This table compares Costco Wholesale Corporation and Vipshop Holdings Limited’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Costco Wholesale Corporation $123.28 billion 0.56 $5.19 billion $5.77 27.22
Vipshop Holdings Limited $9.60 billion 0.60 $592.44 million $0.49 20.12

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

Summary

Costco Wholesale Corporation beats Vipshop Holdings Limited on 9 of the 17 factors compared between the two stocks.

Costco Wholesale Corporation Company Profile

Costco Wholesale Corporation is engaged in the operation of membership warehouses in the United States and Puerto Rico, Canada, the United Kingdom, Mexico, Japan, Australia, Spain, and through its subsidiaries in Taiwan and Korea. As of August 28, 2016, the Company operated 715 warehouses across the world. The Company’s average warehouse space is approximately 144,000 square feet. The Company’s warehouses on average operate on a seven-day, 70-hour week. The Company offers merchandise in various categories, which include foods (including dry foods, packaged foods and groceries); sundries (including snack foods, candy, alcoholic and nonalcoholic beverages, and cleaning supplies); hardlines (including appliances, electronics, health and beauty aids, hardware, and garden and patio); fresh foods (including meat, produce, deli and bakery); softlines (including apparel and small appliances), and other (including gas stations and pharmacy).

Vipshop Holdings Limited Company Profile

Vipshop Holdings Limited is a holding company. The Company is an online discount retailer for brands in China. The Company offers branded products to consumers in China through flash sales mainly on its vip.com Website. The Company’s segment is sales, product distribution and offering of goods on its online platforms. The Company conducts its business through its subsidiaries and consolidated affiliated entities in China. Through its flash sales model, the Company sells limited quantities of discounted branded products online for limited periods of time. The Company offers diversified product offerings from over 17,000 domestic and international brands, including apparel for women, men and children, fashion goods, cosmetics, home goods and other lifestyle products. The Company offers a range of products and services for consumers through lefeng.com, specializing in branded cosmetics, apparel, healthcare products, food and other consumer products.

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