Head-To-Head Survey: Itochu (OTCMKTS:ITOCY) versus MercadoLibre (NASDAQ:MELI)

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MercadoLibre	4.91%	25.15%	3.81%
Itochu	N/A	N/A	N/A

Earnings & Valuation

This table compares MercadoLibre and Itochu”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MercadoLibre	$38.52 billion	1.94	$2.00 billion	$37.28	39.55
Itochu	$98.47 billion	1.21	$5.63 billion	$0.91	16.57

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for MercadoLibre and Itochu, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MercadoLibre	0	5	13	1	2.79
Itochu	0	1	1	2	3.25

MercadoLibre currently has a consensus price target of $2,170.62, suggesting a potential upside of 47.23%. Given MercadoLibre’s higher probable upside, research analysts clearly believe MercadoLibre is more favorable than Itochu.

Insider and Institutional Ownership

87.6% of MercadoLibre shares are held by institutional investors. Comparatively, 0.1% of Itochu shares are held by institutional investors. 0.3% of MercadoLibre shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

MercadoLibre has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500. Comparatively, Itochu has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Dividends

MercadoLibre pays an annual dividend of $0.60 per share and has a dividend yield of 0.0%. Itochu pays an annual dividend of $0.16 per share and has a dividend yield of 1.1%. MercadoLibre pays out 1.6% of its earnings in the form of a dividend. Itochu pays out 17.6% 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.

Summary

MercadoLibre beats Itochu on 12 of the 17 factors compared between the two stocks.

About MercadoLibre

MercadoLibre, Inc. operates an online commerce and financial technology platform focused on Latin America. Founded in Argentina in 1999, the company connects buyers and sellers through its marketplace, where businesses and individuals can list and purchase a wide range of products. The company’s services also include Mercado Pago, which offers digital payment and financial services for transactions on and off its marketplace. MercadoLibre supports commerce with services such as Mercado Envíos, its shipping and logistics platform, and provides advertising tools for merchants and brands.

About Itochu

ITOCHU Corporation is a Japanese general trading company that conducts businesses spanning trade, investment and business development. Its activities connect suppliers, manufacturers and customers across a broad range of industries and markets. The company’s businesses include textiles; machinery; metals and minerals; energy and chemicals; food; general products and real estate; and information and communications technology and financial services. Its operations include sourcing and distributing goods, supporting supply chains, and investing in and managing businesses.