Critical Analysis: Bath & Body Works (NYSE:BBWI) & Itochu (OTCMKTS:ITOCY)

Itochu (OTCMKTS:ITOCY) and Bath & Body Works (NYSE:BBWI) are both retail/wholesale companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, valuation and profitability.

Earnings and Valuation

This table compares Itochu and Bath & Body Works”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Itochu	$96.69 billion	0.78	$5.89 billion	$7.66	13.77
Bath & Body Works	$7.31 billion	0.96	$798.00 million	$3.75	8.84

Itochu has higher revenue and earnings than Bath & Body Works. Bath & Body Works is trading at a lower price-to-earnings ratio than Itochu, indicating that it is currently the more affordable of the two stocks.

Dividends

Itochu pays an annual dividend of $2.01 per share and has a dividend yield of 1.9%. Bath & Body Works pays an annual dividend of $0.80 per share and has a dividend yield of 2.4%. Itochu pays out 26.2% of its earnings in the form of a dividend. Bath & Body Works pays out 21.3% 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. Bath & Body Works is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Itochu has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500. Comparatively, Bath & Body Works has a beta of 1.72, suggesting that its stock price is 72% more volatile than the S&P 500.

Insider & Institutional Ownership

0.1% of Itochu shares are owned by institutional investors. Comparatively, 95.1% of Bath & Body Works shares are owned by institutional investors. 0.3% of Bath & Body Works shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares Itochu and Bath & Body Works’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Itochu	5.93%	13.99%	5.80%
Bath & Body Works	11.10%	-47.44%	15.18%

Analyst Ratings

This is a summary of recent ratings and recommmendations for Itochu and Bath & Body Works, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Itochu	0	0	0	0	0.00
Bath & Body Works	0	4	14	0	2.78

Bath & Body Works has a consensus price target of $42.00, indicating a potential upside of 26.74%. Given Bath & Body Works’ stronger consensus rating and higher possible upside, analysts plainly believe Bath & Body Works is more favorable than Itochu.

Summary

Bath & Body Works beats Itochu on 11 of the 16 factors compared between the two stocks.

About Itochu

ITOCHU Corporation engages in trading and importing/exporting various products worldwide. The company’s Textile segment produces and sells raw materials, threads, and textiles; and garments, home furnishings, and industrial materials, as well as trades in industrial textile and lifestyle products. Its Machinery segment engages in the plants, bridges, railways, and other infrastructure; power generation, transmission, transformation, and sale; water, environment and waste-related; ship trading; renewable and alternative energy; and waste recycling businesses. The company’s Metals & Minerals segment engages in development of metal and mineral resource; processing and steel products; trading of iron ore, coal, pig iron and ferrous raw materials, non-ferrous and light metals, steel products, nuclear fuels, and greenhouse gas emissions; and recycling and waste treatment activities. Its Energy & Chemicals segment trades in crude oil, petroleum products, LPG, LNG, natural gas, hydrogen, organic and inorganic chemicals, functional food, synthetic resins, packaging materials, household goods, fine chemicals, pharmaceuticals, and electronic materials, as well as engages in the solar and biomass power generation, electricity trading, and the energy storage cell businesses. The company’s Food segment produces, distributes, and retails food products. Its General Products & Realty segment produces and sells paper, pulp, natural rubber, tire, and wood products and materials; develops and operates real estate properties, such as housing, logistics facilities, and other projects; and offers logistics services. The company’s ICT & Financial Business segment offers IT, Internet related and venture capital, mobile telephone equipment, BPO, broadcasting and communications, entertainment and content, healthcare and preventive medicine outsourcing, and financial and insurance brokerage services. The company was founded in 1858 and is headquartered in Tokyo, Japan.

About Bath & Body Works

Bath & Body Works, Inc. is a specialty retailers and home to America’s Favorite Fragrances, offering a breadth of exclusive fragrances for the body and home, including the selling collections for fine fragrance mist, body lotion and body cream, 3-wick candles, home fragrance diffusers and liquid hand soap. The company was founded by Leslie Herbert Wexner in 1963 and is headquartered in Columbus, OH.