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

Profitability

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

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

Institutional & Insider Ownership

55.3% of Shopify shares are held by institutional investors. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

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

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

Stitch Fix presently has a consensus target price of $25.67, indicating a potential upside of 9.97%. Shopify has a consensus target price of $101.83, indicating a potential downside of 3.22%. Given Stitch Fix’s higher possible upside, research analysts plainly believe Stitch Fix is more favorable than Shopify.

Earnings and Valuation

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

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Stitch Fix $730.31 million 3.05 $33.18 million N/A N/A
Shopify $389.33 million 23.30 -$35.35 million ($0.49) -214.73

Stitch Fix has higher revenue and earnings 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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