Saratoga Investment (NYSE:SAR) and StoneCastle Financial (NASDAQ:BANX) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their risk, valuation, dividends, analyst recommendations, earnings, profitability and institutional ownership.
Analyst Ratings
This is a summary of current recommendations for Saratoga Investment and StoneCastle Financial, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
---|
Saratoga Investment | 0 | 0 | 7 | 0 | 3.00 |
StoneCastle Financial | 0 | 0 | 1 | 0 | 3.00 |
Saratoga Investment presently has a consensus target price of $23.75, suggesting a potential downside of 5.00%. StoneCastle Financial has a consensus target price of $20.00, suggesting a potential upside of 0.65%. Given StoneCastle Financial's higher possible upside, analysts clearly believe StoneCastle Financial is more favorable than Saratoga Investment.
Profitability
This table compares Saratoga Investment and StoneCastle Financial's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
---|
Saratoga Investment | 54.72% | 7.97% | 4.27% |
StoneCastle Financial | 29.52% | N/A | N/A |
Dividends
Saratoga Investment pays an annual dividend of $1.72 per share and has a dividend yield of 6.9%. StoneCastle Financial pays an annual dividend of $1.52 per share and has a dividend yield of 7.6%. Saratoga Investment pays out 69.1% of its earnings in the form of a dividend. StoneCastle Financial has increased its dividend for 1 consecutive years. StoneCastle Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Volatility & Risk
Saratoga Investment has a beta of 1.68, meaning that its stock price is 68% more volatile than the S&P 500. Comparatively, StoneCastle Financial has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500.
Valuation & Earnings
This table compares Saratoga Investment and StoneCastle Financial's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
---|
Saratoga Investment | $58.45 million | 4.78 | $55.74 million | $2.49 | 10.04 |
StoneCastle Financial | $16.35 million | 7.99 | $10.05 million | N/A | N/A |
Saratoga Investment has higher revenue and earnings than StoneCastle Financial.
Institutional & Insider Ownership
21.6% of Saratoga Investment shares are owned by institutional investors. Comparatively, 25.3% of StoneCastle Financial shares are owned by institutional investors. 15.7% of Saratoga Investment shares are owned by company insiders. Comparatively, 0.4% of StoneCastle Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Summary
Saratoga Investment beats StoneCastle Financial on 8 of the 15 factors compared between the two stocks.