Critical Comparison: Rakuten Group (OTCMKTS:RKUNF) versus Amazon.com (NASDAQ:AMZN)

Rakuten Group (OTCMKTS:RKUNF) and Amazon.com (NASDAQ:AMZN) are both consumer cyclical companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, dividends, profitability, institutional ownership, risk, analyst recommendations and valuation.

Analyst Recommendations

This is a summary of recent ratings and target prices for Rakuten Group and Amazon.com, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rakuten Group	0	0	0	0	N/A
Amazon.com	0	1	43	1	3.00

Amazon.com has a consensus target price of $202.80, suggesting a potential upside of 16.13%. Given Amazon.com’s higher probable upside, analysts plainly believe Amazon.com is more favorable than Rakuten Group.

Profitability

This table compares Rakuten Group and Amazon.com’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rakuten Group	N/A	N/A	N/A
Amazon.com	5.29%	16.61%	6.01%

Valuation & Earnings

This table compares Rakuten Group and Amazon.com’s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rakuten Group	N/A	N/A	N/A	$27.96	0.17
Amazon.com	$574.79 billion	3.16	$30.43 billion	$2.90	60.22

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

Institutional & Insider Ownership

18.9% of Rakuten Group shares are held by institutional investors. Comparatively, 72.2% of Amazon.com shares are held by institutional investors. 12.3% of Amazon.com 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.

Summary

Amazon.com beats Rakuten Group on 10 of the 11 factors compared between the two stocks.

About Rakuten Group

Rakuten Group, Inc. provides services in e-commerce, fintech, digital content, and communications to various users in Japan and internationally. The company operates through three segments: Internet Services, FinTech, and Mobile. The Internet Services segment provides range of e-commerce sites, such as Rakuten Ichiba, an Internet shopping mall, online cash-back sites, travel booking sites, portal sites, and digital content sites. It also offers messaging services and sells advertising; and manages professional sport teams. The FinTech segment offers financial services over the internet related to banking and securities, credit cards, life insurance, general insurance, electronic payment business, crypto asset (virtual currency) spot transaction, etc. The Mobile segment provides communication services and technology, electricity supply, and digital content site services. The company was formerly known as Rakuten, Inc. and changed its name to Rakuten Group, Inc. in April 2021. Rakuten Group, Inc. was incorporated in 1997 and is headquartered in Setagaya, Japan.

About Amazon.com

Amazon.com, Inc. engages in the retail sale of consumer products, advertising, and subscriptions service through online and physical stores in North America and internationally. The company operates through three segments: North America, International, and Amazon Web Services (AWS). It also manufactures and sells electronic devices, including Kindle, Fire tablets, Fire TVs, Echo, Ring, Blink, and eero; and develops and produces media content. In addition, the company offers programs that enable sellers to sell their products in its stores; and programs that allow authors, independent publishers, musicians, filmmakers, Twitch streamers, skill and app developers, and others to publish and sell content. Further, it provides compute, storage, database, analytics, machine learning, and other services, as well as advertising services through programs, such as sponsored ads, display, and video advertising. Additionally, the company offers Amazon Prime, a membership program. The company's products offered through its stores include merchandise and content purchased for resale and products offered by third-party sellers. It serves consumers, sellers, developers, enterprises, content creators, advertisers, and employees. Amazon.com, Inc. was incorporated in 1994 and is headquartered in Seattle, Washington.