Head to Head Comparison: Japan Tobacco (OTCMKTS:JAPAF) & British American Tobacco (NYSE:BTI)

British American Tobacco (NYSE:BTI) and Japan Tobacco (OTCMKTS:JAPAF) are both consumer staples companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, earnings, valuation, institutional ownership, profitability, risk and analyst recommendations.

Analyst Recommendations

This is a summary of recent recommendations and price targets for British American Tobacco and Japan Tobacco, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
British American Tobacco	1	0	4	0	2.60
Japan Tobacco	0	0	0	0	0.00

British American Tobacco currently has a consensus price target of $40.00, indicating a potential downside of 29.64%. Given British American Tobacco’s stronger consensus rating and higher possible upside, equities research analysts plainly believe British American Tobacco is more favorable than Japan Tobacco.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
British American Tobacco	$33.06 billion	3.54	$3.92 billion	$4.87	11.67
Japan Tobacco	N/A	N/A	N/A	$225.55	0.14

British American Tobacco has higher revenue and earnings than Japan Tobacco. Japan Tobacco 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
British American Tobacco	N/A	N/A	N/A
Japan Tobacco	N/A	N/A	N/A

Institutional and Insider Ownership

16.2% of British American Tobacco shares are held by institutional investors. Comparatively, 24.7% of Japan Tobacco shares are held by institutional investors. 0.0% of British American Tobacco shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Dividends

British American Tobacco pays an annual dividend of $3.15 per share and has a dividend yield of 5.5%. Japan Tobacco pays an annual dividend of $79.71 per share and has a dividend yield of 249.1%. British American Tobacco pays out 64.7% of its earnings in the form of a dividend. Japan Tobacco pays out 35.3% 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 Tobacco is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

British American Tobacco beats Japan Tobacco on 6 of the 10 factors compared between the two stocks.

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.

About Japan Tobacco

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 Business, and Processed Food Business. 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 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.