| Stock (Symbol) | Stock Price | |
Vipshop (VIPS) |
$21 |
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| Data is as of | Expected to Report | Sector |
December 9, 2014 |
Mar 02 – Mar 06 |
Retail & Travel |
| Sharek’s Take | ||
 Vipshop, an online flash-sale discount retailer in China, isn’t so perfect anymore. 2013 & 2014 were super years, as the company did everything right (in my eyes anyway). What I mean is VIPS was always pumping out triple-digit profit growth, beating the street, and upping earnings estimates as sales more than doubled each year. VIPS opened 2013 at $2, 2014 at $8, and is now $21 as 2015 is days away. It even had a 10-for-1 stock split. But now profit margins are slipping a bit, and Annual Profit Estimates didn’t increase. In fact, qtrly estimates declined a bit. So this is no longer a perfect stock. Profit margin fell from 6.1% to 5.2% and now 4.8% the past 3qtrs. Mobile sales are an area of growth opportunity and were 57% of sales, up from 16% a year ago, but this takes investment dollars away from profits and is hurting magrins. Still, Profits and sales are expected to climb around 70% next year so this continues to be a premier growth stock. My 2015 Fair Value is $32 and 2016’s is $50. The stock still has huge upside, it’s just not perfect anymore. |
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| One-Year Chart | ||
 I thought the 10-for-1 stock split was too soon, as it took the stock from around $200 to around $20. I don’t think $20 stocks are that good. That’s the bad, here’s the good: everything else. Great Est LTG of 107%, which means analysts think profits will double every year for three-to-five years. |
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| Earnings Table | ||
 Sales were $880 million last qtr, vs the $870 million estimate. Sales were $830 million 2QtrsAgo, well above the $700 million expectation. So this is another area were VIPS was better before than it is now. Profits still jumped 167% last qtr.VIPS beat the street by a penny, like it usually does. Annual Profit Estimates were soaring before, and didn’t increase this time. Last qtr I thought VIPS could make $1 to $1.20 in 2016. Now I have to lower my expectations. Quarterly estimates still show explosive growth ahead, but these did just decline. |
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| Fair Value | ||
 Last qtr I put VIPS Fair Value at 73x earnings. Now I’m taking that down to 60 as the stock’s no longer perfect. But the stock still sells for just 40x 2015 profits, so there’s solid upside here. |
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| Ten-Year Chart | ||
 Now that there are imperfections in the stock, VIPS might take a breather after this long run-up. That would be fine, its healthy when a stock bases for a while. |
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| Power Ranking | Bottom Line | |
Growth Portfolio
4 of 23 |
Vipshop is one of the best stocks of all time, it’s just not as perfect as it used to be. There are a few stocks I like better now. VIPS still has huge upside and is a stock I imagine holding for years. This should be a top-five holding in aggressive growth accounts. VIPS is ranked 4th of 23 stocks in the Growth Portfolio Power Rankings and 5th of 12 stocks in the Aggressive Growth Portfolio Power Rankings. |
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Aggressive Growth Portfolio
5 of 12 |
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