Rakuten Group (OTCMKTS:RKUNF) and Macy’s (NYSE:M) Head-To-Head Contrast

Macy’s (NYSE:M) and Rakuten Group (OTCMKTS:RKUNF) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, institutional ownership, profitability and risk.

Dividends

Macy’s pays an annual dividend of $0.77 per share and has a dividend yield of 3.3%. Rakuten Group pays an annual dividend of $2.70 per share and has a dividend yield of 56.5%. Macy’s pays out 31.8% of its earnings in the form of a dividend. Rakuten Group pays out 9.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Macy’s has increased its dividend for 4 consecutive years. Rakuten Group is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

87.4% of Macy’s shares are held by institutional investors. Comparatively, 18.9% of Rakuten Group shares are held by institutional investors. 1.1% of Macy’s shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Macy’s and Rakuten Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Macy’s	$22.62 billion	0.27	$642.00 million	$2.42	9.53
Rakuten Group	N/A	N/A	N/A	$27.96	0.17

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

Analyst Recommendations

This is a summary of current ratings and recommmendations for Macy’s and Rakuten Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Macy’s	2	7	3	1	2.23
Rakuten Group	0	0	0	0	0.00

Macy’s presently has a consensus price target of $22.78, suggesting a potential downside of 1.22%. Given Macy’s’ stronger consensus rating and higher possible upside, equities research analysts plainly believe Macy’s is more favorable than Rakuten Group.

Profitability

This table compares Macy’s and Rakuten Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Macy’s	2.94%	13.68%	3.88%
Rakuten Group	N/A	N/A	N/A

Summary

Macy’s beats Rakuten Group on 12 of the 15 factors compared between the two stocks.

About Macy’s

Macy’s, Inc. engages in the retail of apparel, accessories, cosmetics, home furnishings, and other consumer goods. The firm’s brands include Macy’s, Bloomingdale’s, and Bluemercury. It offers men’s, women’s, and children’s apparel, women’s accessories, intimate apparel, shoes, cosmetics, fragrances, as well as home and miscellaneous products. The company was founded by Rowland H. Macy in 1858 and is headquartered in New York, NY.

About Rakuten Group

Rakuten Group, Inc. provides services in e-commerce, fintech, digital content, and communications to various users in Japan and internationally. The company operates through three segments: Internet Services, FinTech, and Mobile. The Internet Services segment provides range of e-commerce sites, such as Rakuten Ichiba, an Internet shopping mall, online cash-back sites, travel booking sites, portal sites, and digital content sites. It also offers messaging services and sells advertising; and manages professional sport teams. The FinTech segment offers financial services over the internet related to banking and securities, credit cards, life insurance, general insurance, electronic payment business, crypto asset (virtual currency) spot transaction, etc. The Mobile segment provides communication services and technology, electricity supply, and digital content site services. The company was formerly known as Rakuten, Inc. and changed its name to Rakuten Group, Inc. in April 2021. Rakuten Group, Inc. was incorporated in 1997 and is headquartered in Setagaya, Japan.