Contrasting Dillard’s (NYSE:DDS) and Vipshop (NYSE:VIPS)

Vipshop (NYSE:VIPS) and Dillard’s (NYSE:DDS) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Analyst Recommendations

This is a summary of current ratings and target prices for Vipshop and Dillard’s, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Vipshop	2	4	3	1	2.30
Dillard’s	2	3	0	0	1.60

Vipshop presently has a consensus price target of $18.52, suggesting a potential upside of 40.28%. Dillard’s has a consensus price target of $545.67, suggesting a potential downside of 16.95%. Given Vipshop’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Vipshop is more favorable than Dillard’s.

Dividends

Vipshop pays an annual dividend of $0.60 per share and has a dividend yield of 4.5%. Dillard’s pays an annual dividend of $1.20 per share and has a dividend yield of 0.2%. Vipshop pays out 19.9% of its earnings in the form of a dividend. Dillard’s pays out 2.7% 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. Dillard’s has raised its dividend for 14 consecutive years.

Risk and Volatility

Vipshop has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500. Comparatively, Dillard’s has a beta of 1.15, indicating that its stock price is 15% more volatile than the S&P 500.

Valuation and Earnings

This table compares Vipshop and Dillard’s”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Vipshop	$15.15 billion	0.42	$1.04 billion	$3.02	4.37
Dillard’s	$6.47 billion	1.59	$570.19 million	$43.65	15.05

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Vipshop	9.88%	12.63%	7.09%
Dillard’s	10.48%	31.88%	16.20%

Institutional & Insider Ownership

48.8% of Vipshop shares are held by institutional investors. Comparatively, 67.2% of Dillard’s shares are held by institutional investors. 29.5% of Vipshop shares are held by insiders. Comparatively, 34.8% of Dillard’s shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Dillard’s beats Vipshop on 11 of the 18 factors compared between the two stocks.

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.

About Dillard’s

Dillard’s, Inc. engages in the retail of fashion apparel, cosmetics, and home furnishings, and other consumer goods. It operates through the Retail Operations and Construction segments. The Retail Operations segment comprises sells cosmetics, ladies’ apparel, ladies’ accessories and lingerie, juniors’ and children’s apparel, men’s apparel and accessories, shoes, and home and furniture products. The Construction segment constructs and remodels stores through CDI Contractors, LLC. The company was founded by William Thomas Dillard in 1938 and is headquartered in Little Rock, AR.