Comparing Alibaba Group (NYSE:BABA) and MercadoLibre (NASDAQ:MELI)

MercadoLibre (NASDAQ:MELI) and Alibaba Group (NYSE:BABA) are both large-cap consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, profitability, valuation and risk.

Analyst Recommendations

This is a breakdown of current ratings and target prices for MercadoLibre and Alibaba Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MercadoLibre	0	5	13	1	2.79
Alibaba Group	0	6	13	2	2.81

MercadoLibre currently has a consensus target price of $2,198.75, indicating a potential upside of 45.61%. Alibaba Group has a consensus target price of $182.89, indicating a potential upside of 67.42%. Given Alibaba Group’s stronger consensus rating and higher probable upside, analysts plainly believe Alibaba Group is more favorable than MercadoLibre.

Institutional and Insider Ownership

87.6% of MercadoLibre shares are owned by institutional investors. Comparatively, 13.5% of Alibaba Group shares are owned by institutional investors. 0.3% of MercadoLibre shares are owned by insiders. Comparatively, 12.5% of Alibaba Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Risk and Volatility

MercadoLibre has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500. Comparatively, Alibaba Group has a beta of 0.44, meaning that its share price is 56% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MercadoLibre	4.91%	25.93%	4.02%
Alibaba Group	7.00%	4.79%	2.80%

Valuation and Earnings

This table compares MercadoLibre and Alibaba Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MercadoLibre	$28.89 billion	2.65	$2.00 billion	$37.28	40.50
Alibaba Group	$1,044.97 billion	0.26	$15.02 billion	$4.13	26.45

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

About MercadoLibre

MercadoLibre, Inc. operates online commerce platforms in the United States. It operates Mercado Libre Marketplace, an automated online commerce platform that enables businesses, merchants, and individuals to list merchandise and conduct sales and purchases digitally; and Mercado Pago FinTech platform, a financial technology solution platform, which facilitates transactions on and off its marketplaces by providing a mechanism that allows its users to send and receive payments online, as well as allows users to transfer money through their websites or on the apps. The company also offers Mercado Fondo that allows users to invest funds deposited in their Mercado Pago accounts; Mercado Credito, which extends loans to certain merchants and consumers; and Mercado Envios logistics solution that enables sellers on its platform to utilize third-party carriers and other logistics service providers, as well as fulfillment and warehousing services for sellers. In addition, it provides Mercado Libre Classifieds, an online classified listing service, where users can list and purchase motor vehicles, real estate, and services; Mercado Ads, an advertising platform, which enables large retailers and brands to promote their products and services on the web; and Mercado Shops, an online storefronts solution that enables users to set-up, manage, and promote their own digital stores. The company was incorporated in 1999 and is headquartered in Montevideo, Uruguay.

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.