Analyzing Fast Retailing (OTCMKTS:FRCOY) and Home Depot (NYSE:HD)

Home Depot (NYSE:HD) and Fast Retailing (OTCMKTS:FRCOY) are both consumer discretionary companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.

Institutional and Insider Ownership

70.9% of Home Depot shares are owned by institutional investors. Comparatively, 0.0% of Fast Retailing shares are owned by institutional investors. 0.1% of Home Depot shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Home Depot pays an annual dividend of $9.32 per share and has a dividend yield of 2.8%. Fast Retailing pays an annual dividend of $0.24 per share and has a dividend yield of 0.5%. Home Depot pays out 65.2% of its earnings in the form of a dividend. Fast Retailing pays out 0.2% 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. Home Depot has raised its dividend for 16 consecutive years. Home Depot is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Home Depot and Fast Retailing”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Home Depot	$164.68 billion	2.00	$14.16 billion	$14.29	23.08
Fast Retailing	N/A	N/A	N/A	$99.47	0.45

Home Depot has higher revenue and earnings than Fast Retailing. Fast Retailing is trading at a lower price-to-earnings ratio than Home Depot, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current ratings for Home Depot and Fast Retailing, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Home Depot	1	13	18	0	2.53
Fast Retailing	0	2	1	0	2.33

Home Depot presently has a consensus price target of $375.54, indicating a potential upside of 13.87%. Given Home Depot’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Home Depot is more favorable than Fast Retailing.

Profitability

This table compares Home Depot and Fast Retailing’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Home Depot	8.41%	106.42%	13.76%
Fast Retailing	N/A	N/A	N/A

Summary

Home Depot beats Fast Retailing on 12 of the 14 factors compared between the two stocks.

About Home Depot

The Home Depot, Inc. operates as a home improvement retailer in the United States and internationally. It sells various building materials, home improvement products, lawn and garden products, and décor products, as well as facilities maintenance, repair, and operations products. The company also offers installation services for flooring, water heaters, bath, garage doors, cabinets, cabinet makeovers, countertops, sheds, furnaces and central air systems, and windows. In addition, it provides tool and equipment rental services. The company primarily serves homeowners; and professional renovators/remodelers, general contractors, maintenance professionals, handymen, property managers, and building service contractors, as well as specialty tradesmen, such as electricians, plumbers, and painters. It sells its products through websites, including homedepot.com; homedepot.ca and homedepot.com.mx; blinds.com, justblinds.com, and americanblinds.com for custom window coverings; thecompanystore.com, an online site for textiles and décor products; hdsupply.com for maintenance, repair, and operations (MRO) products and related services; and The Home Depot stores. The Home Depot, Inc. was incorporated in 1978 and is headquartered in Atlanta, Georgia.

About Fast Retailing

Fast Retailing Co., Ltd., through its subsidiaries, operates as an apparel designer and retailer in Japan and internationally. The company operates through UNIQLO Japan, UNIQLO International, GU, and Global Brands segments. It manufactures and retails clothing for men, women, children, and babies, as well as offers shoes and other goods and items. The company operates stores and franchises under the UNIQLO, GU, PLST, Theory, COMPTOIR DES COTONNIERS, J Brand, and PRINCESSE TAM.TAM brand names. It also sells its products through online; and provides real estate leasing services. The company was formerly known as Ogori Shoji Co., Ltd. and changed its name to Fast Retailing Co., Ltd. in September 1991. Fast Retailing Co., Ltd. was founded in 1949 and is headquartered in Yamaguchi, Japan.