Shopify (NYSE: SHOP) and Stitch Fix (NASDAQ:SFIX) are both mid-cap technology companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, risk, dividends, analyst recommendations, earnings and profitability.

Profitability

This table compares Shopify and Stitch Fix’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Shopify -7.90% -6.58% -5.79%
Stitch Fix N/A N/A N/A

Institutional & Insider Ownership

55.3% of Shopify shares are held by institutional investors. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Shopify and Stitch Fix’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Shopify $389.33 million 23.41 -$35.35 million ($0.49) -215.78
Stitch Fix $730.31 million 3.23 $33.18 million N/A N/A

Stitch Fix has higher revenue and earnings than Shopify.

Analyst Recommendations

This is a breakdown of current ratings and price targets for Shopify and Stitch Fix, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Shopify 1 13 20 0 2.56
Stitch Fix 0 4 3 0 2.43

Shopify currently has a consensus price target of $101.83, suggesting a potential downside of 3.69%. Stitch Fix has a consensus price target of $25.67, suggesting a potential upside of 3.66%. Given Stitch Fix’s higher possible upside, analysts plainly believe Stitch Fix is more favorable than Shopify.

Summary

Stitch Fix beats Shopify on 6 of the 10 factors compared between the two stocks.

About Shopify

Shopify Inc. (Shopify) provides a cloud-based, multi-channel commerce platform designed for small and medium-sized businesses. The Company offers subscription solutions and merchant solutions. The Company’s software is used by merchants to run their business across all of their sales channels, including Web and mobile storefronts, physical retail locations, social media storefronts and marketplaces. The Shopify platform provides merchants with a single view of their business and customers across all of their sales channels and enables them to manage products and inventory, process orders and payments, ship orders, build customer relationships and leverage analytics and reporting all from one integrated back office. The Shopify platform includes a mobile-optimized checkout system, which is designed to enable merchants’ consumers to buy products over mobile Websites. Its merchants are able to offer their customers the ability to check out by using Apple Pay.

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