Reviewing MonotaRO (OTCMKTS:MONOY) and Rakuten Group (OTCMKTS:RKUNF)

Rakuten Group (OTCMKTS:RKUNF) and MonotaRO (OTCMKTS:MONOY) are both consumer cyclical companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitability, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Rakuten Group and MonotaRO, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rakuten Group	0	0	0	0	N/A
MonotaRO	0	0	0	0	N/A

Profitability

This table compares Rakuten Group and MonotaRO’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
MonotaRO	8.70%	27.44%	18.96%

Dividends

Rakuten Group pays an annual dividend of $2.70 per share and has a dividend yield of 43.3%. MonotaRO pays an annual dividend of $0.07 per share and has a dividend yield of 0.4%. Rakuten Group pays out 9.6% of its earnings in the form of a dividend. MonotaRO pays out 22.6% 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.

Valuation & Earnings

This table compares Rakuten Group and MonotaRO”s 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	0.22
MonotaRO	$1.81 billion	4.31	$154.87 million	$0.31	50.32

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

Insider & Institutional Ownership

18.9% of Rakuten Group shares are held by institutional investors. Comparatively, 0.1% of MonotaRO shares are held by institutional investors. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Summary

MonotaRO beats Rakuten Group on 5 of the 9 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 MonotaRO

MonotaRO Co., Ltd., together with its subsidiaries, operates an online MRO products store in Japan and internationally. The company offers safety protective equipment, work clothes, and safety shoes; logistics, storage, and packing supplies; tapes; safety, disaster prevention, and crime prevention products; safety signs; ship and fishing supplies; office supplies; office furniture/lighting/cleaning supplies; cutting tools and abrasives; measurement and surveying equipment; hand tools/electric and pneumatic tools; sprays, oils, greases, and paints; adhesives and repair materials; welding supplies; and piping and water related components/pumps/pneumatic and hydraulic equipment/hoses. It also provides mechanical parts; control equipment; soldering and anti-static products; architectural hardware, building materials, painting, and interior supplies; air conditioning and electrical equipment; electrical materials; screws, bolts, nails, and materials; automotive supplies; truck supplies; motorcycle supplies; bicycle supplies; scientific research and development supplies; clean room supplies; kitchen equipment and store supplies; agricultural and gardening supplies; and medical and nursing supplies. It serves factories, construction, automobile maintenance, and other industries. The company was formerly known as Sumisho Grainger Co., Ltd. and changed its name to MonotaRO Co., Ltd. in February 2006. The company was incorporated in 2000 and is headquartered in Osaka, Japan. MonotaRO Co., Ltd. operates as a subsidiary of Grainger Global Holdings, Inc.