Analyzing Japan Tobacco (OTCMKTS:JAPAY) and BAE Systems (OTCMKTS:BAESY)

Japan Tobacco (OTCMKTS:JAPAY) and BAE Systems (OTCMKTS:BAESY) are both consumer staples companies, but which is the better investment? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, dividends, valuation and analyst recommendations.

Institutional & Insider Ownership

0.2% of BAE Systems shares are owned by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings for Japan Tobacco and BAE Systems, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Japan Tobacco	0	1	0	0	2.00
BAE Systems	1	1	3	0	2.40

Japan Tobacco presently has a consensus price target of $10.00, indicating a potential downside of 24.80%. BAE Systems has a consensus price target of $475.00, indicating a potential upside of 605.79%. Given BAE Systems’ stronger consensus rating and higher probable upside, analysts plainly believe BAE Systems is more favorable than Japan Tobacco.

Profitability

This table compares Japan Tobacco and BAE Systems’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Japan Tobacco	17.17%	12.48%	6.96%
BAE Systems	N/A	N/A	N/A

Risk and Volatility

Japan Tobacco has a beta of 0.41, suggesting that its share price is 59% less volatile than the S&P 500. Comparatively, BAE Systems has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.

Valuation & Earnings

This table compares Japan Tobacco and BAE Systems’ revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Japan Tobacco	$20.26 billion	N/A	$3.42 billion	$0.98	13.57
BAE Systems	$24.98 billion	2.04	$2.31 billion	N/A	N/A

Japan Tobacco has higher earnings, but lower revenue than BAE Systems.

Dividends

Japan Tobacco pays an annual dividend of $0.45 per share and has a dividend yield of 3.4%. BAE Systems pays an annual dividend of $1.81 per share and has a dividend yield of 2.7%. Japan Tobacco pays out 45.9% of its earnings in the form of a dividend.

Summary

BAE Systems beats Japan Tobacco on 7 of the 12 factors compared between the two stocks.

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, and Processed Food. 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 also 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.

About BAE Systems

BAE Systems plc provides defense, aerospace, and security solutions worldwide. The company operates through five segments: Electronic Systems, Platforms & Services, Air, Maritime, and Cyber & Intelligence. The Electronic Systems segment offers electronic warfare systems, navigation systems, electro-optical sensors, military and commercial digital engine and flight controls, precision guidance and seeker solutions, military communication systems and data links, persistent surveillance capabilities, space electronics, and electric drive propulsion systems. The Cyber & Intelligence segment provides solutions to modernize, maintain, and test cyber-harden aircraft, radars, missile systems, and mission applications that detect and deter threats to national security; systems engineering, integration, and sustainment services for critical weapons systems, C5ISR, and cyber security; and solutions and services to intelligence and federal/civilian agencies. It also offers data intelligence solutions to protect nations, businesses, and citizens. The Platforms & Services segment manufactures, and upgrades combat vehicles, weapons, and munitions, as well as provides naval ship repair services and the management of government-owned ammunition plants. The Air segment develops future combat air systems and falconworks. The Maritime segment provides maritime and land activities, including submarine, ship build, and support programmes. BAE Systems plc was founded in 1970 and is headquartered in Camberley, the United Kingdom.