Reviewing PDD (NASDAQ:PDD) & Alibaba Group (NYSE:BABA)

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

Valuation and Earnings

This table compares PDD and Alibaba Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PDD	$61.75 billion	1.83	$13.99 billion	$9.08	8.74
Alibaba Group	$148.40 billion	1.72	$15.02 billion	$4.13	24.86

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

Insider and Institutional Ownership

39.8% of PDD shares are held by institutional investors. Comparatively, 13.5% of Alibaba Group shares are held by institutional investors. 3.7% of PDD shares are held by company insiders. Comparatively, 12.5% of Alibaba Group shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Volatility and Risk

PDD has a beta of -0.03, indicating that its share price is 103% less volatile than the S&P 500. Comparatively, Alibaba Group has a beta of 0.44, indicating that its share price is 56% less volatile than the S&P 500.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
PDD	20.73%	22.29%	14.68%
Alibaba Group	7.00%	4.79%	2.80%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for PDD and Alibaba Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PDD	1	10	5	0	2.25
Alibaba Group	0	6	13	2	2.81

PDD presently has a consensus target price of $107.31, indicating a potential upside of 35.25%. Alibaba Group has a consensus target price of $183.26, indicating a potential upside of 78.48%. Given Alibaba Group’s stronger consensus rating and higher probable upside, analysts plainly believe Alibaba Group is more favorable than PDD.

Summary

Alibaba Group beats PDD on 9 of the 15 factors compared between the two stocks.

About PDD

PDD Holdings Inc. operates e-commerce platforms that connect consumers with merchants and other suppliers. Its businesses include Pinduoduo, a marketplace focused on China, and Temu, an international online marketplace. Pinduoduo uses interactive shopping features, including group buying, and offers products across categories such as groceries, apparel, home goods and electronics. The platform has also emphasized agricultural products, connecting farmers with consumers and other buyers. Temu serves customers in multiple markets outside China and offers a wide range of merchandise from suppliers and brands.

About Alibaba Group

Alibaba Group Holding Limited is a technology and commerce company founded in 1999 and headquartered in Hangzhou, China. It operates digital platforms that connect consumers, merchants, businesses and other participants in commerce. Its businesses include China-focused marketplaces such as Taobao and Tmall, international platforms including AliExpress and Alibaba.com, and Alibaba Cloud, which provides cloud computing and related technology services. The group also has operations in areas such as logistics, local services and digital media.