Vipshop stock has been consolidating while the large players volume has been rising. This positive divergence is why I went long Vipshop stock this morning.
Vipshop has lost market-share to Alibaba and JD.com but its last earnings report wasn’t that bad.
Vipshop’s total net revenue increased by 30.3% to RMB17.52 billion (US$2.58 billion) for Q2 2017 compared with net revenue of RMB13.44 billion in Q2 2016, primarily driven by the growth in the number of total active customers, repeat customers, and total orders. The Company’s revenue number fell short of analysts’ estimates of $2.60 billion.
Vipshop’s number of active customers for Q2 2017 increased by 22% to 28.1 million YOY. The Company’s total active customers for the trailing twelve months ended June 30, 2017, reached 58.8 million, representing a 32% YOY increase. For Q2 2017, Vipshop’s total orders had increased by 23% to 84.8 million YOY.
Vipshop’s current forward P/E of 10.4 times 2018 earnings could make the company a potential acquisition target.
VIPS has a good setup pattern. Prices have been consolidating lately and the volatility has been reduced. There is a support zone below the current price at $9.13, a stop order could be placed below this zone. We notice that large players showed an interest for VIPS in the last couple of days, which is a good sign.
VIPS has a Return On Asserts of 7.81%. This is among the best returns in the industry. The industry average is 2.33%. VIPS outperforms 90% of its industry peers. VIPS has a Return On Equity of 27.44%. This is better than the industry average of 12.32%. VIPS has a Profit Margin of 3.16%. This is better than the industry average of 1.28%. The Piotroski-F score of VIPS is 7.00. This is a strong score and indicates good health and profitability for VIPS.
VIPS's low PEG Ratio, which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company. The Price/Earnings Ratio is 19.33, which is inline with the industry average which is at 22.29. With a Forward Price/Earnings Ratio of 15.08, VIPS is valued correctly. With a price book ratio of 5.15, VIPS is valued correctly. When comparing the price book ratio of VIPS to the average industry price book ratio of 2.90, VIPS is valued more expensive than its industry peers.
The Earnings Per Share has grown by an nice 10.70% over the past year. The Earnings Per Share has been growing by 51.23% on average over the past 5 years. This is a very strong growth The Earnings Per Share is expected to grow by 22.59% on average over the next 2 years. This is a very strong growth When comparing the growth rate of the last 5 years to the growth rate of the upcoming 2 years, we see that the growth is accelerating. VIPS shows a strong growth in Revenue. In the last year, the Revenue has grown by 23.22%. Measured over the past 5 years, VIPS shows a very strong growth in Revenue. The Revenue has been growing by 67.56% on average per year.
An Altman-Z score of 4.31 indicates that VIPS is not in any danger for bankruptcy at the moment. The Piotroski-F score of VIPS is 7.00. This is a strong score and indicates good health and profitability for VIPS. VIPS has a Current Ratio of 1.05. This is a normal value and indicates that VIPS is financially healthy and should not expect problems in meeting its short term obligations. VIPS has a Altman-Z score comparable to the industry average, which is at 3.38. When comparing the Current Ratio of VIPS to the average industry Current Ratio of 1.21, VIPS is less able to pay its short term obligations than its industry peers. VIPS has a Quick Ratio of 1.05. This is a bad value and indicates that VIPS is not financially healthy enough and could expect problems in meeting its short term obligations. When comparing the Quick Ratio of VIPS to the average industry Current Ratio of 0.94, VIPS is less able to pay its short term obligations than its industry peers. Compared to an average industry Debt to Equity Ratio of 0.34, VIPS is a more dependent on financing than its industry peers.