Head-To-Head Review: Japan Tobacco (JAPAY) versus Philip Morris International (PM)

Japan Tobacco (OTCMKTS: JAPAY) and Philip Morris International (NYSE:PM) are both large-cap consumer staples companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, profitability, valuation, dividends, earnings, institutional ownership and analyst recommendations.

Dividends

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Philip Morris International pays an annual dividend of $4.28 per share and has a dividend yield of 4.5%. Japan Tobacco does not pay a dividend. Philip Morris International pays out 110.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Japan Tobacco has increased its dividend for 10 consecutive years.

Profitability

This table compares Japan Tobacco and Philip Morris International’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Japan Tobacco 18.36% 15.03% 8.34%
Philip Morris International 7.73% -71.99% 18.29%

Analyst Recommendations

This is a summary of current ratings for Japan Tobacco and Philip Morris International, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Japan Tobacco 0 0 0 0 N/A
Philip Morris International 0 3 10 0 2.77

Philip Morris International has a consensus target price of $123.67, suggesting a potential upside of 29.32%. Given Philip Morris International’s higher possible upside, analysts plainly believe Philip Morris International is more favorable than Japan Tobacco.

Insider & Institutional Ownership

0.1% of Japan Tobacco shares are held by institutional investors. Comparatively, 72.2% of Philip Morris International shares are held by institutional investors. 0.2% of Philip Morris International shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Japan Tobacco and Philip Morris International’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Japan Tobacco $19.09 billion 2.81 $3.88 billion N/A N/A
Philip Morris International $78.10 billion 1.90 $6.04 billion $3.87 24.71

Philip Morris International has higher revenue and earnings than Japan Tobacco.

Risk & Volatility

Japan Tobacco has a beta of 1.44, suggesting that its share price is 44% more volatile than the S&P 500. Comparatively, Philip Morris International has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500.

Summary

Philip Morris International beats Japan Tobacco on 9 of the 15 factors compared between the two stocks.

About Japan Tobacco

Japan Tobacco Inc., together with its subsidiaries, manufactures and sells tobacco products, primarily cigarettes in Japan and internationally. It also distributes imported tobacco products. The company offers its tobacco products primarily under the Winston, Camel, Mevius, LD, Benson & Hedges (B&H), Glamour, Sobranie, Silk Cut, Natural American Spirit, Seven Stars, Pianissimo, Peace, HOPE, and other brand names. In addition, it engages in the research and development, manufacture, and sale of prescription drugs in the fields of metabolic diseases, viral infection, and autoimmune/inflammatory diseases. The company?s pharmaceutical products include Riona tablets for the treatment of hyperphosphatemia, Remitch capsules for pruritus, and KAYEXALATE dry syrup for hyperkalemia; FUTHAN for injection, a protease inhibitor; ANTEBATE, a topical corticosteroid; CEDARTOLEN sublingual immunotherapy drugs; MITICURE House Dust Mite sublingual tablets; and Truvada, Stribild, Genvoya, and Descovy combination tablets for HIV. Further, it manufactures and sells staple food products, including frozen noodles, frozen rice, packed-cooked rice, and frozen baked bread; bakery products; and seasonings, including yeast extracts and oyster sauce. Japan Tobacco Inc. was founded in 1898 and is headquartered in Tokyo, Japan.

About Philip Morris International

Philip Morris International Inc. is a holding company. The Company is engaged in the manufacture and sale of cigarettes, other tobacco products and other nicotine-containing products in markets outside of the United States. Its segments include European Union (EU); Eastern Europe, Middle East & Africa (EEMA); Asia, and Latin America & Canada. The Company’s portfolio of international and local brands is led by Marlboro. Its mid-price brands are L&M, Lark, Merit, Muratti and Philip Morris. Its other international brands include Bond Street, Chesterfield, Next and Red & White. The Company also owns various local cigarette brands, such as Dji Sam Soe, Sampoerna and U Mild in Indonesia; Champion, Fortune and Jackpot in the Philippines; Apollo-Soyuz and Optima in Russia; Morven Gold in Pakistan; Boston in Colombia; Belmont, Canadian Classics and Number 7 in Canada; f6 in Germany; Delicados in Mexico; Assos in Greece, and Petra in the Czech Republic and Slovakia.

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