Rakuten Group (OTCMKTS:RKUNF – Get Rating) and Canadian Tire (OTCMKTS:CDNAF – Get Rating) are both consumer cyclical companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, earnings, analyst recommendations, valuation, dividends and institutional ownership.
Institutional & Insider Ownership
18.9% of Rakuten Group shares are held by institutional investors. Comparatively, 26.7% of Canadian Tire shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Analyst Ratings
This is a summary of current recommendations and price targets for Rakuten Group and Canadian Tire, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rakuten Group | 0 | 1 | 0 | 0 | 2.00 |
| Canadian Tire | 0 | 0 | 3 | 0 | 3.00 |
Profitability
This table compares Rakuten Group and Canadian Tire’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 |
| Canadian Tire | N/A | N/A | N/A |
Dividends
Rakuten Group pays an annual dividend of $2.70 per share and has a dividend yield of 56.2%. Canadian Tire pays an annual dividend of $1.73 per share and has a dividend yield of 1.3%. Rakuten Group pays out 9.6% of its earnings in the form of a dividend. Canadian Tire pays out 23.0% 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. Rakuten Group is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Rakuten Group and Canadian Tire’s gross revenue, earnings per share 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 |
| Canadian Tire | N/A | N/A | N/A | $7.48 | 18.04 |
Rakuten Group is trading at a lower price-to-earnings ratio than Canadian Tire, indicating that it is currently the more affordable of the two stocks.
Summary
Canadian Tire beats Rakuten Group on 5 of the 8 factors compared between the two stocks.
About Rakuten Group
Rakuten Group, Inc. engages in the business of Internet services. It operates through the following segments: Internet Services, FinTech, and Mobile. The Internet Services segment manages e-commerce (EC), online cash-back, travel booking, and portal and digital content sites. The FinTech segment provides services over the Internet related to banking and securities, credit cards, life insurance, and electronic money. The Mobile segment manages messaging and communication services and sale of mobile devices. The company was founded by Hiroshi Mikitani on February 7, 1997 and is headquartered in Tokyo, Japan.
About Canadian Tire
Canadian Tire Corp. Ltd. operates as a general merchandise retailer for gasoline, automotive, sports and home products. It operates through segments: Retail, CT REIT, and Financial Services. The Retail segment focuses on Canadian Tire, SportChek, Mark’s, PartSource, Helly Hansen, Party City, and Petroleum. The Financial segment is involved in operating subsidiaries of CTFS Holdings which provides s financial and other ancillary products and services, including issuing credit cards. The CT REIT segment includes owning, developing, and leasing income-producing commercial properties. The company was founded by Alfred Jackson Billes and James William Billes in September 15, 1922 and is headquartered in Toronto, Canada.
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