Mercadolibre (NASDAQ:MELI) and Paypal (NASDAQ:PYPL) are both large-cap retail/wholesale companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, dividends, earnings, valuation, risk, analyst recommendations and institutional ownership.

Profitability

This table compares Mercadolibre and Paypal’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Mercadolibre -0.74% -1.55% -0.46%
Paypal 13.92% 15.50% 5.37%

Insider & Institutional Ownership

84.7% of Mercadolibre shares are owned by institutional investors. Comparatively, 80.9% of Paypal shares are owned by institutional investors. 0.4% of Mercadolibre shares are owned by insiders. Comparatively, 0.2% of Paypal shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Mercadolibre and Paypal, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Mercadolibre 1 6 7 0 2.43
Paypal 0 10 23 0 2.70

Mercadolibre presently has a consensus price target of $509.46, indicating a potential downside of 19.68%. Paypal has a consensus price target of $111.03, indicating a potential downside of 7.98%. Given Paypal’s stronger consensus rating and higher possible upside, analysts clearly believe Paypal is more favorable than Mercadolibre.

Volatility and Risk

Mercadolibre has a beta of 1.78, suggesting that its stock price is 78% more volatile than the S&P 500. Comparatively, Paypal has a beta of 0.98, suggesting that its stock price is 2% less volatile than the S&P 500.

Valuation & Earnings

This table compares Mercadolibre and Paypal’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Mercadolibre $1.44 billion 21.73 -$36.58 million ($0.82) -773.52
Paypal $15.45 billion 9.17 $2.06 billion $1.79 67.40

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

Summary

Paypal beats Mercadolibre on 10 of the 14 factors compared between the two stocks.

Mercadolibre Company Profile

MercadoLibre, Inc. operates online commerce platforms in Latin America. It operates MercadoLibre Marketplace, an automated online commerce platform that enables businesses and individuals to list merchandise and conduct sales and purchases online; and MercadoPago FinTech, 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, and allows merchants to process transactions via their Websites and mobile apps, as well as in their brick-and-mortar stores through QR and mobile points of sale. The company also offers MercadoFondo, an asset management product; and MercadoCredito, a lending solution. In addition, it provides MercadoEnvios logistics solution, which offers its platform technological and operational integration services with third-party carriers and other logistics service providers, as well as fulfillment and warehousing services for sellers. Further, the company provides MercadoLibre Classifieds service that enables users to list their offerings related to motor vehicles, vessels, aircraft, and real estate and services outside the Marketplace platform. Additionally, it offers MercadoLibre Advertising platform, which enables retailers and various other consumer brands to promote their products and services on the Internet by providing branding and performance marketing solutions. The company also provides MercadoShops, a software-as-a-service hosted online store solution that enables users to set-up, manage, and promote their own Webstores. The company was founded in 1999 and is headquartered in Buenos Aires, Argentina.

Paypal Company Profile

PayPal Holdings, Inc. operates as a technology platform and digital payments company that enables digital and mobile payments on behalf of consumers and merchants worldwide. Its payment solutions include PayPal, PayPal Credit, Braintree, Venmo, Xoom, and iZettle products. The company's Payments Platform allows consumers to send payments, withdraw funds to their bank accounts, and hold balances in their PayPal accounts in various currencies. It also offers gateway services that enable merchants to accept payments online with credit or debit cards. PayPal Holdings, Inc. was founded in 1998 and is headquartered in San Jose, California.

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