Pennantpark Floating Rate Capital (NASDAQ: PFLT) and Horizon Technology Finance Corporation (NASDAQ:HRZN) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitabiliy, analyst recommendations, institutional ownership and risk.
Valuation and Earnings
This table compares Pennantpark Floating Rate Capital and Horizon Technology Finance Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Pennantpark Floating Rate Capital||$48.75 million||N/A||N/A||N/A||N/A|
|Horizon Technology Finance Corporation||$30.65 million||N/A||N/A||($0.23)||-48.87|
Insider and Institutional Ownership
17.5% of Horizon Technology Finance Corporation shares are owned by institutional investors. 1.3% of Horizon Technology Finance Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Horizon Technology Finance Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 10.7%. Pennantpark Floating Rate Capital does not pay a dividend. Horizon Technology Finance Corporation pays out -521.7% of its earnings in the form of a dividend.
This is a breakdown of current ratings and price targets for Pennantpark Floating Rate Capital and Horizon Technology Finance Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pennantpark Floating Rate Capital||0||1||4||0||2.80|
|Horizon Technology Finance Corporation||1||5||0||0||1.83|
Pennantpark Floating Rate Capital currently has a consensus target price of $14.75, indicating a potential upside of 5.36%. Horizon Technology Finance Corporation has a consensus target price of $12.48, indicating a potential upside of 11.03%. Given Horizon Technology Finance Corporation’s higher possible upside, analysts clearly believe Horizon Technology Finance Corporation is more favorable than Pennantpark Floating Rate Capital.
This table compares Pennantpark Floating Rate Capital and Horizon Technology Finance Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pennantpark Floating Rate Capital||N/A||N/A||N/A|
|Horizon Technology Finance Corporation||-8.67%||11.17%||6.60%|
Horizon Technology Finance Corporation beats Pennantpark Floating Rate Capital on 7 of the 11 factors compared between the two stocks.
Pennantpark Floating Rate Capital Company Profile
PennantPark Floating Rate Capital Ltd. is a business development company. The Company is a closed-end, externally managed and non-diversified investment company. Its investment objectives are to generate current income and capital appreciation by investing primarily in floating rate loans and other investments made to the United States middle-market companies. It provides first lien secured debt and other opportunistic financings (senior notes, second lien, mezzanine, private high yield debt, and preferred and common stock) to middle market sponsors and companies. Its investments may include equity features, such as direct investments in the equity securities of borrowers or warrants or options to buy a minority interest in a portfolio company. It has investments in various sectors, including aerospace and defense; consumer services; healthcare and pharmaceuticals, and others. Its investment activities are managed by the investment advisor, PennantPark Investment Advisers, LLC.
Horizon Technology Finance Corporation Company Profile
Horizon Technology Finance Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to maximize investment portfolio’s total return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. It lends to and invests in development-stage companies in the technology, life science, healthcare information and services and cleantech industries (collectively Target Industries). It is focused on making secured debt investments (Venture Loans) to venture capital backed companies in its Target Industries. As of December 31, 2016, its debt investment portfolio consisted of 44 debt investments. As of December 31, 2016, the Company held warrants to purchase stock, predominantly preferred stock, in 78 portfolio companies, equity positions in five portfolio companies and success fee arrangements in 11 portfolio companies.
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