Financial Survey: Alphabet (NASDAQ:GOOG) vs. Rakuten (OTCMKTS:RKUNY)

Rakuten (OTCMKTS:RKUNY) and Alphabet (NASDAQ:GOOG) are both large-cap computer and technology companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, dividends, valuation, earnings and profitability.

Volatility & Risk

Rakuten has a beta of 1.17, meaning that its stock price is 17% more volatile than the S&P 500. Comparatively, Alphabet has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.

Dividends

Rakuten pays an annual dividend of $0.02 per share and has a dividend yield of 0.3%. Alphabet pays an annual dividend of $0.84 per share and has a dividend yield of 0.3%. Rakuten pays out -4.0% of its earnings in the form of a dividend. Alphabet pays out 8.3% 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. Alphabet has increased its dividend for 1 consecutive years. Rakuten is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rakuten	-6.67%	-13.98%	-0.63%
Alphabet	32.23%	35.00%	25.30%

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rakuten	$15.07 billion	0.86	-$1.07 billion	($0.50)	-11.98
Alphabet	$350.02 billion	10.71	$100.12 billion	$10.14	30.62

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

Institutional & Insider Ownership

27.3% of Alphabet shares are owned by institutional investors. 13.0% of Alphabet shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and price targets for Rakuten and Alphabet, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rakuten	0	0	0	2	4.00
Alphabet	2	3	29	7	3.00

Alphabet has a consensus target price of $313.04, suggesting a potential upside of 0.81%. Given Alphabet’s higher probable upside, analysts clearly believe Alphabet is more favorable than Rakuten.

Summary

Alphabet beats Rakuten on 14 of the 18 factors compared between the two stocks.

About Rakuten

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.

About Alphabet

Alphabet Inc. offers various products and platforms in the United States, Europe, the Middle East, Africa, the Asia-Pacific, Canada, and Latin America. It operates through Google Services, Google Cloud, and Other Bets segments. The Google Services segment provides products and services, including ads, Android, Chrome, devices, Gmail, Google Drive, Google Maps, Google Photos, Google Play, Search, and YouTube. It is also involved in the sale of apps and in-app purchases and digital content in the Google Play and YouTube; and devices, as well as in the provision of YouTube consumer subscription services. The Google Cloud segment offers infrastructure, cybersecurity, databases, analytics, AI, and other services; Google Workspace that include cloud-based communication and collaboration tools for enterprises, such as Gmail, Docs, Drive, Calendar, and Meet; and other services for enterprise customers. The Other Bets segment sells healthcare-related and internet services. The company was incorporated in 1998 and is headquartered in Mountain View, California.