It can be unethical. For example, say you sell Nike shoes online, and Puma and Adidas are your main competitors.  If as part of your sales pitch you are comparing how good Nikes are compared to Puma and Adidas, those names will show up as keywords for your site in searches. That would be ethical use of a competitor's name, even though someone searching for "Puma" or "Adidas" would be taken to your page. On the other hand, if you just use those names as "bait", such as in a keywords tag or with invisible text, just to draw searchers, that would be considered unethical (and possibly a legal problem with trademark abuse). Potential customers of Puma or Adidas would come to your site and get nothing on those brands, just a sales pitch for Nike.

Whether it's a brand name/trademark or a company/domain name, your competitor won't be happy that you're using it. However, if you actually legitimately use that name in your site (such as in a comparison), they shouldn't have any legal case against you. It can be a fine line, so be careful about how you use a competitor's intellectual property on your site.