Financial Analysis: Japan Tobacco (JAPAF) versus The Competition

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

Analyst Ratings

This is a breakdown of recent ratings and price targets for Japan Tobacco and its peers, as reported 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	1374	3370	5254	188	2.42

As a group, “Diversified Consumer Services” companies have a potential upside of 56.88%. Given Japan Tobacco’s peers higher possible upside, analysts clearly believe Japan Tobacco has less favorable growth aspects than its peers.

Dividends

Japan Tobacco pays an annual dividend of $79.70 per share and has a dividend yield of 169.9%. 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 5.7% and pay out 44.9% of their earnings in the form of a dividend. Japan Tobacco is clearly a better dividend stock than its peers, given its higher yield and lower payout ratio.

Profitability

This table compares Japan Tobacco and its peers’ 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	-2.01%	-38.83%	3.06%

Valuation & Earnings

This table compares Japan Tobacco and its peers gross revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Japan Tobacco	N/A	N/A	0.21
Japan Tobacco Competitors	$3.29 billion	$218.79 million	14.56

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

Insider & Institutional Ownership

24.7% of Japan Tobacco shares are held by institutional investors. Comparatively, 48.1% of shares of all “Diversified Consumer Services” companies are held by institutional investors. 19.8% of shares of all “Diversified Consumer Services” companies 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.

Summary

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

Japan Tobacco Company Profile

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.