Rakuten (OTCMKTS:RKUNY – Get Free Report) and Upwork (NASDAQ:UPWK – Get Free Report) are both communication services companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, valuation, analyst recommendations, earnings, institutional ownership, risk and dividends.
Profitability
This table compares Rakuten and Upwork’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Rakuten | -4.83% | -10.02% | -0.44% |
| Upwork | 13.81% | 17.92% | 8.54% |
Risk and Volatility
Rakuten has a beta of 1.12, meaning that its share price is 12% more volatile than the S&P 500. Comparatively, Upwork has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.
Valuation and Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Rakuten | $16.70 billion | 0.69 | -$1.19 billion | ($0.37) | -14.30 |
| Upwork | $790.56 million | 1.43 | $115.43 million | $0.81 | 11.31 |
Upwork has lower revenue, but higher earnings than Rakuten. Rakuten is trading at a lower price-to-earnings ratio than Upwork, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of current ratings and target prices for Rakuten and Upwork, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Rakuten | 0 | 1 | 0 | 1 | 3.00 |
| Upwork | 1 | 9 | 3 | 0 | 2.15 |
Upwork has a consensus price target of $15.50, indicating a potential upside of 69.21%. Given Upwork’s higher probable upside, analysts plainly believe Upwork is more favorable than Rakuten.
Institutional and Insider Ownership
77.7% of Upwork shares are held by institutional investors. 4.9% of Upwork shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Summary
Upwork beats Rakuten on 11 of the 15 factors compared between the two stocks.
About Rakuten
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 Upwork
Upwork Inc., together with its subsidiaries, operates a work marketplace that connects businesses with various independent professionals and agencies in the United States, India, the Philippines, and internationally. The company’s work marketplace provides access to talent with various skills across a range of categories, including administrative support, sales and marketing, design and creative, and customer service, as well as web, mobile, and software development. Its work marketplace also enables clients to streamline workflows, such as talent sourcing, outreach, and contracting. The company’s work marketplace offers access to various functionalities for remote engagements with talent, including communication and collaboration, ability to receive talent invoices through their work marketplace, and payment protection. Its marketplace offerings include Upwork Payroll and Upwork Enterprise, as well as managed and escrow services. The company was formerly known as Elance-oDesk, Inc. and changed its name to Upwork Inc. in May 2015. Upwork Inc. was incorporated in 2013 and is headquartered in San Francisco, California.
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