Contrasting Itochu (OTCMKTS:ITOCY) and LY (OTCMKTS:YAHOY)

LY (OTCMKTS:YAHOY) and Itochu (OTCMKTS:ITOCY) are both large-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Insider and Institutional Ownership

0.1% of Itochu shares are owned by institutional investors. 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
LY	6.24%	5.49%	1.80%
Itochu	N/A	N/A	N/A

Risk & Volatility

LY has a beta of 0.9, meaning that its stock price is 10% less volatile than the S&P 500. Comparatively, Itochu has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500.

Valuation & Earnings

This table compares LY and Itochu”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
LY	$13.53 billion	1.79	$1.28 billion	$0.39	18.08
Itochu	$98.47 billion	1.20	$5.63 billion	$0.93	15.98

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

Dividends

LY pays an annual dividend of $0.10 per share and has a dividend yield of 1.4%. Itochu pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. LY pays out 25.6% of its earnings in the form of a dividend. Itochu pays out 17.2% 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.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for LY and Itochu, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
LY	0	2	0	0	2.00
Itochu	0	1	1	2	3.25

Summary

Itochu beats LY on 8 of the 15 factors compared between the two stocks.

About LY

LY Corporation engages in the online advertising and e-commerce businesses in Japan. The company provides LINE, a communication app; and Yahoo! JAPAN, an internet service that offers search, news, weather, shopping, auction, and other services. It also offers reuse, membership, and payment-related services. The company was formerly known as Z Holdings Corporation and changed its name to LY Corporation in October 2023. LY Corporation was founded in 1996 and is headquartered in Chiyoda, Japan. LY Corporation operates as a subsidiary of A Holdings Corporation.

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.