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Head to Head Review: MercadoLibre (MELI) and Alibaba Group Holding Limited (BABA)

MercadoLibre (NASDAQ: MELI) and Alibaba Group Holding Limited (NYSE:BABA) are both large-cap retail/wholesale companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, risk, profitabiliy and valuation.

Risk and Volatility

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MercadoLibre has a beta of 2.03, indicating that its share price is 103% more volatile than the S&P 500. Comparatively, Alibaba Group Holding Limited has a beta of 2.62, indicating that its share price is 162% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and price targets for MercadoLibre and Alibaba Group Holding Limited, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MercadoLibre 1 6 5 0 2.33
Alibaba Group Holding Limited 1 3 30 1 2.89

MercadoLibre currently has a consensus target price of $260.83, indicating a potential downside of 9.71%. Alibaba Group Holding Limited has a consensus target price of $140.29, indicating a potential downside of 9.33%. Given Alibaba Group Holding Limited’s stronger consensus rating and higher probable upside, analysts plainly believe Alibaba Group Holding Limited is more favorable than MercadoLibre.

Valuation & Earnings

This table compares MercadoLibre and Alibaba Group Holding Limited’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MercadoLibre $960.69 million 13.28 $259.37 million $3.50 82.54
Alibaba Group Holding Limited $23.41 billion 16.72 $9.33 billion $2.49 62.14

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

Profitability

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

Net Margins Return on Equity Return on Assets
MercadoLibre 16.10% 41.12% 13.09%
Alibaba Group Holding Limited 27.51% 15.40% 9.71%

Dividends

MercadoLibre pays an annual dividend of $0.60 per share and has a dividend yield of 0.2%. Alibaba Group Holding Limited does not pay a dividend. MercadoLibre pays out 17.1% of its earnings in the form of a dividend.

Institutional and Insider Ownership

92.0% of MercadoLibre shares are held by institutional investors. Comparatively, 36.6% of Alibaba Group Holding Limited shares are held by institutional investors. 0.4% of MercadoLibre shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Alibaba Group Holding Limited beats MercadoLibre on 10 of the 17 factors compared between the two stocks.

MercadoLibre Company Profile

MercadoLibre logoMercadoLibre, Inc. is an e-commerce company. The Company enables commerce through its marketplace platform in Latin America, which is designed to provide users with a portfolio of services to facilitate commercial transactions. Its geographic segments are Brazil, Argentina, Mexico Venezuela and Other Countries (which includes Chile, Colombia, Costa Rica, Dominican Republic, Ecuador, Panama, Peru, Portugal, Guatemala, Bolivia, Paraguay, Uruguay and the United States of America). It also operates online commerce platforms in the Dominican Republic, Honduras, Nicaragua, Salvador, Panama, Bolivia, Guatemala, Paraguay and Portugal. It offers an ecosystem of six integrated e-commerce services: the MercadoLibre Marketplace, the MercadoLibre Classifieds Service, the MercadoPago payments solution, the MercadoLibre advertising program, the MercadoShops online Webstores solution and the MercadoEnvios shipping service.

Alibaba Group Holding Limited Company Profile

Alibaba Group Holding Limited logoAlibaba Group Holding Limited is a holding company. Through its subsidiaries, the Company is engaged in online and mobile commerce through offering of products, services and technology that enable merchants, brands and other businesses to transform the way they market, sell and operate in the People’s Republic of China (China) and internationally. Its businesses consist of core commerce, cloud computing, mobile media and entertainment, and other innovation initiatives. Through investee affiliates, it also participates in the logistics and local services sectors. Retail commerce in China operated by the Company includes the China online commerce destination (Taobao Marketplace); the China third-party platform for brands and retailers (Tmall), and the sales and marketing platform for flash sales (Juhuasuan). Wholesale commerce in China operated by the Company includes the China domestic wholesale marketplace (1688.com) and the wholesale marketplace for global trade (Alibaba.com).

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