Medirom Healthcare Technologies and Regis Corporation are both small-cap service firms currently under scrutiny for their investment potential. This article evaluates the two companies based on several critical factors, including institutional ownership, risk, analyst recommendations, profitability, and valuation metrics.
Financial Performance and Valuation
Medirom Healthcare Technologies (NASDAQ: MRM) specializes in holistic healthcare services in Japan, operating through two primary segments: Relaxation Salon and Digital Preventative Healthcare. As of December 31, 2021, Medirom operated 312 relaxation salons under the Re.Ra.Ku and Ruam Ruam brands. The company utilizes an on-demand health monitoring smartphone application and offers various services aimed at health improvement.
In contrast, Regis Corporation (NASDAQ: RGS) owns and operates a vast network of hairstyling and hair care salons across the United States, the United Kingdom, Canada, and Puerto Rico. As of June 30, 2021, Regis managed 5,917 salons, with a significant portion being franchised. Their offerings include haircutting, styling, and hair coloring, alongside various beauty products.
Both companies present unique financial profiles. Medirom’s revenue and earnings per share (EPS) have shown steady growth, while Regis has displayed robust earnings, making it a noteworthy competitor in the salon industry.
Ownership and Analyst Ratings
Institutional ownership is a key indicator of a company’s potential for growth. Currently, 31.5% of Regis shares are held by institutional investors, whereas 40.2% of Medirom’s shares are owned by insiders. This discrepancy suggests that while both companies have their strengths, Medirom’s insider ownership may indicate greater confidence from its management.
Analysts have also weighed in on both companies, providing ratings and price targets. According to MarketBeat.com, Regis has recently received favorable ratings from several analysts, reflecting positive sentiment in the market.
In terms of volatility, Medirom Healthcare has a beta of 0.94, which signifies it is 6% less volatile than the S&P 500. Conversely, Regis has a beta of 1.48, indicating its stock is 48% more volatile than the market. This heightened volatility may appeal to risk-seeking investors but could deter those seeking stability.
Profitability metrics also favor Regis, which outperforms Medirom in net margins, return on equity, and return on assets. This performance indicates a more efficient operation and a potentially better return on investment for shareholders.
In summary, Regis Corporation surpasses Medirom Healthcare Technologies in eight out of ten critical investment factors. Investors may find Regis to be a more attractive option based on its broader market presence, financial performance, and analyst confidence.
As both companies continue to evolve, the ultimate decision on which to invest in will depend on individual risk tolerance and investment goals.
