Japan Tob (OTCMKTS:JAPAY) and British American Tobacco (OTCMKTS:BTAFF) Financial Analysis

Japan Tob (OTCMKTS:JAPAY) and British American Tobacco (OTCMKTS:BTAFF) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, earnings, risk, analyst recommendations, institutional ownership, dividends and valuation.

Institutional and Insider Ownership

39.7% of British American Tobacco shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Japan Tob	14.55%	12.21%	6.31%
British American Tobacco	N/A	N/A	N/A

Dividends

Japan Tob pays an annual dividend of $0.42 per share and has a dividend yield of 2.6%. British American Tobacco pays an annual dividend of $1.42 per share and has a dividend yield of 2.5%. Japan Tob pays out 46.2% of its earnings in the form of a dividend. British American Tobacco pays out 74.3% 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. Japan Tob is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Japan Tob and British American Tobacco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Japan Tob	0	0	0	1	4.00
British American Tobacco	0	0	0	0	0.00

Earnings & Valuation

This table compares Japan Tob and British American Tobacco”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Japan Tob	$20.83 billion	2.77	$3.06 billion	$0.91	17.84
British American Tobacco	N/A	N/A	N/A	$1.92	30.28

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

Summary

Japan Tob beats British American Tobacco on 8 of the 11 factors compared between the two stocks.

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.

About British American Tobacco

British American Tobacco p.l.c. engages in the provision of tobacco and nicotine products to consumers worldwide. It also offers vapour, heated, and modern oral nicotine products; combustible cigarettes; and traditional oral products, such as snus and moist snuff. The company offers its products under the Vuse, glo, Velo, Grizzly, Kodiak, Dunhill, Kent, Lucky Strike, Pall Mall, Rothmans, Camel, Natural American Spirit, Newport, Vogue, Viceroy, Kool, Peter Stuyvesant, Craven A, State Express 555 and Shuang Xi brands. It also distributes its products to retail outlets. British American Tobacco p.l.c. was founded in 1902 and is based in London, the United Kingdom.