Critical Review: Nintendo (NTDOY) and MCBC (MCFT)

Nintendo (OTCMKTS: NTDOY) and MCBC (NASDAQ:MCFT) are both consumer discretionary companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Dividends

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Nintendo pays an annual dividend of $0.57 per share and has a dividend yield of 1.0%. MCBC does not pay a dividend. Nintendo pays out 51.8% of its earnings in the form of a dividend.

Profitability

This table compares Nintendo and MCBC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Nintendo 16.12% 9.07% 7.56%
MCBC 9.07% 149.34% 21.40%

Analyst Ratings

This is a breakdown of current ratings for Nintendo and MCBC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Nintendo 1 2 2 0 2.20
MCBC 0 0 4 0 3.00

Nintendo currently has a consensus target price of $66.00, indicating a potential upside of 17.33%. MCBC has a consensus target price of $28.08, indicating a potential upside of 8.77%. Given Nintendo’s higher probable upside, equities analysts plainly believe Nintendo is more favorable than MCBC.

Insider and Institutional Ownership

0.1% of Nintendo shares are held by institutional investors. Comparatively, 95.4% of MCBC shares are held by institutional investors. 2.6% of MCBC shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Nintendo and MCBC’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Nintendo $4.52 billion 14.09 $902.65 million $1.10 51.14
MCBC $228.63 million 2.11 $19.57 million $1.27 20.33

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

Volatility & Risk

Nintendo has a beta of 0.89, indicating that its stock price is 11% less volatile than the S&P 500. Comparatively, MCBC has a beta of 1.17, indicating that its stock price is 17% more volatile than the S&P 500.

Summary

MCBC beats Nintendo on 9 of the 16 factors compared between the two stocks.

About Nintendo

Nintendo Co., Ltd. is mainly engaged in the development, manufacture and sale of entertainment products in home entertainment field. The Company’s main products include leisure machines such as portable and console game machines and software, as well as trump and Carta (Japanese-style playing cards). As of March 31, 2014, the Company had 29 subsidiaries and six associated companies.

About MCBC

MCBC Holdings, Inc. (MCBC) is a holding company. The Company is a designer and manufacturer of inboard tournament ski boats and V-drive runabouts under the MasterCraft brand. The Company operates through two segments: MasterCraft and Hydra-Sports. The MasterCraft product brand consists of recreational performance boats primarily used for water skiing, wakeboarding and wake surfing, and general recreational boating. The Company distributes the MasterCraft product brand through its dealer network. The Company manufactures a range of Hydra-Sports recreational fishing boats. It also leases a parts warehouse in the United Kingdom to expedite service, primarily to dealers and customers in the European Union. Its MasterCraft-branded portfolio includes Star Series, XSeries and NXT boats. In addition, MCBC offers various accessories, including trailers and aftermarket parts. The Company operates primarily through its subsidiaries, MasterCraft Boat Company, LLC and MCBC Hydra Boats, LLC.

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