Critical Analysis: OneSpaWorld (NASDAQ:OSW) versus Makita (OTCMKTS:MKTAY)

Makita (OTCMKTS:MKTAY) and OneSpaWorld (NASDAQ:OSW) are both mid-cap consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Analyst Ratings

This is a summary of current ratings and recommmendations for Makita and OneSpaWorld, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Makita	1	0	0	0	1.00
OneSpaWorld	0	1	5	1	3.00

OneSpaWorld has a consensus target price of $30.60, indicating a potential upside of 40.75%. Given OneSpaWorld’s stronger consensus rating and higher possible upside, analysts clearly believe OneSpaWorld is more favorable than Makita.

Profitability

This table compares Makita and OneSpaWorld’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Makita	10.40%	8.23%	6.98%
OneSpaWorld	8.02%	18.36%	14.28%

Institutional and Insider Ownership

96.0% of OneSpaWorld shares are owned by institutional investors. 1.0% of Makita shares are owned by company insiders. Comparatively, 3.6% of OneSpaWorld shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Dividends

Makita pays an annual dividend of $1.18 per share and has a dividend yield of 3.4%. OneSpaWorld pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. Makita pays out 57.6% of its earnings in the form of a dividend. OneSpaWorld pays out 25.3% 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.

Valuation & Earnings

This table compares Makita and OneSpaWorld”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Makita	$5.17 billion	1.77	$524.13 million	$2.05	16.82
OneSpaWorld	$961.00 million	2.30	$71.62 million	$0.79	27.52

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

Volatility and Risk

Makita has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, OneSpaWorld has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.

Summary

OneSpaWorld beats Makita on 12 of the 17 factors compared between the two stocks.

About Makita

Makita Corporation engages in the manufacture and sale of electric power tools, pneumatic tools, and gardening and household equipment in Japan, Europe, North America, Asia, Australia, Brazil, and the United Arab Emirates. It offers cordless, drilling/fastening, impact drilling/demolition, grinding/sanding, sawing, planning/routering, pneumatic, outdoor power, and dust extraction/other equipment, as well as accessories; and cutting equipment for new materials, masonry, and metals. The company was formerly known as Makita Electric Works, Ltd. and changed its name to Makita Corporation in April 1991. Makita Corporation was founded in 1915 and is headquartered in Anjo, Japan.

About OneSpaWorld

OneSpaWorld Holdings Limited operates health and wellness centers onboard cruise ships and at destination resorts worldwide. Its health and wellness centers offer services, such as traditional body, salon, and skin care services and products; self-service fitness facilities, specialized fitness classes, and personal fitness training; pain management, detoxifying programs, and body composition analyses; weight management programs and products; and medi-spa services. The company also provides its guests access to beauty and wellness brands, including ELEMIS, Grown Alchemist, Kérastase, Dysport, Restylane, Thermage, CoolSculpting, truSculpt 3D, truSculpt iD, Good Feet, and Hyperice with various brands offered in the cruise market. The company is based in Nassau, Bahamas.