Financial Analysis: Arhaus (NASDAQ:ARHS) vs. Itochu (OTCMKTS:ITOCY)

Arhaus (NASDAQ:ARHS) and Itochu (OTCMKTS:ITOCY) are both retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, valuation, institutional ownership and risk.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Arhaus and Itochu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Arhaus	0	11	4	0	2.27
Itochu	0	0	0	0	0.00

Arhaus presently has a consensus price target of $10.8333, suggesting a potential downside of 15.36%. Given Arhaus’ stronger consensus rating and higher probable upside, research analysts plainly believe Arhaus is more favorable than Itochu.

Profitability

This table compares Arhaus and Itochu’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Arhaus	5.33%	20.08%	5.62%
Itochu	5.93%	13.99%	5.80%

Institutional & Insider Ownership

27.9% of Arhaus shares are held by institutional investors. Comparatively, 0.1% of Itochu shares are held by institutional investors. 1.8% of Arhaus shares are held by company insiders. 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.

Earnings & Valuation

This table compares Arhaus and Itochu”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Arhaus	$1.27 billion	1.42	$68.55 million	$0.50	25.60
Itochu	$96.69 billion	0.81	$5.89 billion	$7.66	14.18

Itochu has higher revenue and earnings than Arhaus. Itochu is trading at a lower price-to-earnings ratio than Arhaus, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Arhaus has a beta of 2.56, indicating that its stock price is 156% more volatile than the S&P 500. Comparatively, Itochu has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500.

Summary

Arhaus beats Itochu on 9 of the 14 factors compared between the two stocks.

About Arhaus

Arhaus, Inc. operates as a lifestyle brand and premium retailer in the home furnishings market in the United States. It provides merchandise assortments across various categories, including furniture, lighting, textiles, décor, and outdoor. The company's furniture products comprise bedroom, dining room, living room, and home office furnishings, which includes sofas, dining tables and chairs, accent chairs, console and coffee tables, beds, headboards, dressers, desks, bookcases, modular storage, and other items; and outdoor products, such as outdoor dining tables, chairs, chaises and other furniture, lighting, textiles, décor, umbrellas, and fire pits. It offers lighting products, including various distinct and artistic lighting fixtures comprising chandeliers, pendants, table and floor lamps, and sconces; textile products, such as handcrafted indoor and outdoor rugs, bed linens, and pillows and throws; and décor products, including various wall art to mirrors, vases to candles, and other decorative accessories. The company distributes its products through an omni-channel model comprising showrooms, e-commerce platform, print and digital media, and in-home designer services. Arhaus, Inc. was founded in 1986 and is headquartered in Boston Heights, Ohio.

About Itochu

ITOCHU Corporation engages in trading and importing/exporting various products worldwide. The company’s Textile segment produces and sells raw materials, threads, and textiles; and garments, home furnishings, and industrial materials, as well as trades in industrial textile and lifestyle products. Its Machinery segment engages in the plants, bridges, railways, and other infrastructure; power generation, transmission, transformation, and sale; water, environment and waste-related; ship trading; renewable and alternative energy; and waste recycling businesses. The company’s Metals & Minerals segment engages in development of metal and mineral resource; processing and steel products; trading of iron ore, coal, pig iron and ferrous raw materials, non-ferrous and light metals, steel products, nuclear fuels, and greenhouse gas emissions; and recycling and waste treatment activities. Its Energy & Chemicals segment trades in crude oil, petroleum products, LPG, LNG, natural gas, hydrogen, organic and inorganic chemicals, functional food, synthetic resins, packaging materials, household goods, fine chemicals, pharmaceuticals, and electronic materials, as well as engages in the solar and biomass power generation, electricity trading, and the energy storage cell businesses. The company’s Food segment produces, distributes, and retails food products. Its General Products & Realty segment produces and sells paper, pulp, natural rubber, tire, and wood products and materials; develops and operates real estate properties, such as housing, logistics facilities, and other projects; and offers logistics services. The company’s ICT & Financial Business segment offers IT, Internet related and venture capital, mobile telephone equipment, BPO, broadcasting and communications, entertainment and content, healthcare and preventive medicine outsourcing, and financial and insurance brokerage services. The company was founded in 1858 and is headquartered in Tokyo, Japan.