Critical Comparison: Japan Tobacco (JAPAF) versus Its Peers

Japan Tobacco (OTCMKTS:JAPAF) is one of 168 public companies in the “Diversified Consumer Services” industry, but how does it weigh in compared to its competitors? We will compare Japan Tobacco to similar businesses based on the strength of its analyst recommendations, profitability, institutional ownership, valuation, earnings, dividends and risk.

Profitability

This table compares Japan Tobacco and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Japan Tobacco	N/A	N/A	N/A
Japan Tobacco Competitors	-2.17%	-38.90%	2.97%

Insider & Institutional Ownership

24.7% of Japan Tobacco shares are held by institutional investors. Comparatively, 48.7% of shares of all “Diversified Consumer Services” companies are held by institutional investors. 19.5% of shares of all “Diversified Consumer Services” companies are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Japan Tobacco and its competitors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Japan Tobacco	0	0	1	0	3.00
Japan Tobacco Competitors	1368	3358	5240	186	2.42

As a group, “Diversified Consumer Services” companies have a potential upside of 54.56%. Given Japan Tobacco’s competitors higher probable upside, analysts clearly believe Japan Tobacco has less favorable growth aspects than its competitors.

Valuation and Earnings

This table compares Japan Tobacco and its competitors revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Japan Tobacco	N/A	N/A	0.19
Japan Tobacco Competitors	$3.29 billion	$218.13 million	16.57

Japan Tobacco’s competitors have higher revenue and earnings than Japan Tobacco. Japan Tobacco is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Dividends

Japan Tobacco pays an annual dividend of $79.70 per share and has a dividend yield of 184.0%. Japan Tobacco pays out 35.3% of its earnings in the form of a dividend. As a group, “Diversified Consumer Services” companies pay a dividend yield of 5.6% and pay out 44.8% of their earnings in the form of a dividend. Japan Tobacco is clearly a better dividend stock than its competitors, given its higher yield and lower payout ratio.

Summary

Japan Tobacco competitors beat Japan Tobacco on 7 of the 13 factors compared.

About Japan Tobacco

Japan Tobacco Inc., a tobacco company, manufactures and sells tobacco products, pharmaceuticals, and processed foods in Japan and internationally. The company operates through three segments: Tobacco Business, Pharmaceutical Business, and Processed Food Business. It offers tobacco products, such as cigarettes, heat-not-burn tobacco products, E-vapor products, fine cut tobacco products, cigars, pipes, smokeless tobacco products, and hookah and kretek products. The company provides reduced-risk products, including infused tobacco capsules and heated tobacco sticks. In addition, it researches and develops, manufactures, and sells prescription drugs for the therapeutic areas, such as cardiovascular, kidney and metabolism, immunity/inflammation, and central nervous system. Further, the company provides frozen and room-temperature products, such as frozen udon noodles, packed rice, and frozen okonomiyaki; bakery products; and seasonings, including yeast extracts, assembled, kelp and bonito extracts, and oyster sauces. It offers its products under the Winston, Camel, MEVIUS, and LD brands. Japan Tobacco Inc. was incorporated in 1985 and is headquartered in Tokyo, Japan.