Critical Analysis: Japan Tob (OTCMKTS:JAPAY) & OneSpaWorld (NASDAQ:OSW)

OneSpaWorld (NASDAQ:OSW) and Japan Tob (OTCMKTS:JAPAY) are both consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.

Profitability

This table compares OneSpaWorld and Japan Tob’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OneSpaWorld	8.02%	18.36%	14.28%
Japan Tob	N/A	N/A	N/A

Earnings & Valuation

This table compares OneSpaWorld and Japan Tob”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OneSpaWorld	$961.00 million	2.51	$71.62 million	$0.79	30.05
Japan Tob	$23.20 billion	3.51	$3.42 billion	$1.37	16.72

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

Volatility & Risk

OneSpaWorld has a beta of 0.9, indicating that its stock price is 10% less volatile than the S&P 500. Comparatively, Japan Tob has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500.

Dividends

OneSpaWorld pays an annual dividend of $0.20 per share and has a dividend yield of 0.8%. Japan Tob pays an annual dividend of $0.53 per share and has a dividend yield of 2.3%. OneSpaWorld pays out 25.3% of its earnings in the form of a dividend. Japan Tob pays out 38.7% 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 Ratings

This is a breakdown of recent recommendations for OneSpaWorld and Japan Tob, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OneSpaWorld	0	1	5	0	2.83
Japan Tob	1	1	1	0	2.00

OneSpaWorld currently has a consensus target price of $31.25, indicating a potential upside of 31.63%. Japan Tob has a consensus target price of $17.00, indicating a potential downside of 25.80%. Given OneSpaWorld’s stronger consensus rating and higher possible upside, equities research analysts plainly believe OneSpaWorld is more favorable than Japan Tob.

Insider and Institutional Ownership

96.0% of OneSpaWorld shares are held by institutional investors. 3.6% of OneSpaWorld shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

OneSpaWorld beats Japan Tob on 11 of the 16 factors compared between the two stocks.

About OneSpaWorld

OneSpaWorld Holdings Limited operates health and wellness centers onboard cruise ships and at destination resorts worldwide. Its health and wellness centers offer services, such as traditional body, salon, and skin care services and products; self-service fitness facilities, specialized fitness classes, and personal fitness training; pain management, detoxifying programs, and body composition analyses; weight management programs and products; and medi-spa services. The company also provides its guests access to beauty and wellness brands, including ELEMIS, Grown Alchemist, Kérastase, Dysport, Restylane, Thermage, CoolSculpting, truSculpt 3D, truSculpt iD, Good Feet, and Hyperice with various brands offered in the cruise market. The company is based in Nassau, Bahamas.

About Japan Tob

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, and Processed Food. 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 also 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.