Head to Head Analysis: PayPal (NASDAQ:PYPL) and Alibaba Group (NYSE:BABA)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Alibaba Group	8.44%	12.70%	8.02%
PayPal	14.30%	22.82%	5.75%

Volatility & Risk

Alibaba Group has a beta of 0.32, suggesting that its stock price is 68% less volatile than the S&P 500. Comparatively, PayPal has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500.

Insider & Institutional Ownership

13.5% of Alibaba Group shares are owned by institutional investors. Comparatively, 68.3% of PayPal shares are owned by institutional investors. 12.5% of Alibaba Group shares are owned by insiders. Comparatively, 0.1% of PayPal shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Alibaba Group and PayPal’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	$941.17 billion	0.22	$11.08 billion	$4.29	19.39
PayPal	$29.77 billion	2.33	$4.25 billion	$3.97	17.12

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

Analyst Ratings

This is a breakdown of recent recommendations for Alibaba Group and PayPal, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Alibaba Group	0	3	13	0	2.81
PayPal	0	17	19	1	2.57

Alibaba Group presently has a consensus price target of $107.61, indicating a potential upside of 29.37%. PayPal has a consensus price target of $75.25, indicating a potential upside of 10.73%. Given Alibaba Group’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Alibaba Group is more favorable than PayPal.

Summary

Alibaba Group beats PayPal on 8 of the 15 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 PayPal

PayPal Holdings, Inc. operates a technology platform that enables digital payments on behalf of merchants and consumers worldwide. It operates a two-sided network at scale that connects merchants and consumers that enables its customers to connect, transact, and send and receive payments through online and in person, as well as transfer and withdraw funds using various funding sources, such as bank accounts, PayPal or Venmo account balance, PayPal and Venmo branded credit products comprising its installment products, credit and debit cards, and cryptocurrencies, as well as other stored value products, including gift cards and eligible rewards. The company provides payment solutions under the PayPal, PayPal Credit, Braintree, Venmo, Xoom, Zettle, Hyperwallet, Honey, and Paidy names. The company was founded in 1998 and is headquartered in San Jose, California.