Here's Why Vipshop (VIPS) Stock is Rising Today
NEW YORK (TheStreet) -- Vipshop (VIPS) - Get Report stock is increasing by 1.97% to $21.78 in late afternoon trading on Wednesday, after China markets notched their biggest gain in seven weeks amid a five-year plan to boost the country's lagging economy.
Based in Guangzhou, China, Vipshop operates as an online discount retailer for brands in China.
Annual growth should exceed 6.5% during the next five years to double 2010 GDP and per capita income by 2020, President Xi Jinping said, Bloomberg reports. The government will up the yuan's convertibility by 2020 in the hope that the currency will be added to the IMF's Special Drawing Rights basket.
Additionally, stocks gained after the central bank accidentally published five-month old comments indicating the start of a trading link between exchanges in Shenzhen and Hong Kong during 2015, according to Bloomberg.
The Shanghai Composite Index closed higher by 4.31% to $3,459.64 today.
"Expectations that China will join the SDR and reforms will be stepped up seem to be the catalyst for stocks," Wu Kan, a fund manager at JK Life Insurance told Bloomberg. "Technically speaking, the market has chosen a direction -- to go up -- after fluctuating for a few weeks. There's probably still room for more upside."
Separately, TheStreet Ratings team rates VIPSHOP HOLDINGS LTD -ADR as a Buy with a ratings score of B-. TheStreet Ratings Team has this to say about their recommendation:
We rate VIPSHOP HOLDINGS LTD -ADR (VIPS) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, notable return on equity, impressive record of earnings per share growth and compelling growth in net income. We feel its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- VIPS's very impressive revenue growth exceeded the industry average of 45.7%. Since the same quarter one year prior, revenues leaped by 75.4%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- VIPSHOP HOLDINGS LTD -ADR reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, VIPSHOP HOLDINGS LTD -ADR increased its bottom line by earning $0.23 versus $0.09 in the prior year. This year, the market expects an improvement in earnings ($3.63 versus $0.23).
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Internet & Catalog Retail industry and the overall market, VIPSHOP HOLDINGS LTD -ADR's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Internet & Catalog Retail industry average, but is greater than that of the S&P 500. The net income increased by 144.1% when compared to the same quarter one year prior, rising from $26.39 million to $64.40 million.
- The gross profit margin for VIPSHOP HOLDINGS LTD -ADR is rather low; currently it is at 24.96%. Regardless of VIPS's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, VIPS's net profit margin of 4.42% compares favorably to the industry average.
- You can view the full analysis from the report here: VIPS
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.