Capital Southwest (CSWC) Competitors

Capital Southwest (NASDAQ:CSWC) and Ares Capital (NASDAQ:ARCC) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, media sentiment, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Does the media refer more to CSWC or ARCC?

In the previous week, Ares Capital had 6 more articles in the media than Capital Southwest. MarketBeat recorded 20 mentions for Ares Capital and 14 mentions for Capital Southwest. Ares Capital's average media sentiment score of 1.13 beat Capital Southwest's score of 0.87 indicating that Ares Capital is being referred to more favorably in the news media.

Company	Very Positive	Positive	Neutral	Negative	Very Negative	Overall Sentiment
Capital Southwest	7 Very Positive mention(s)	0 Positive mention(s)	4 Neutral mention(s)	2 Negative mention(s)	0 Very Negative mention(s)	Positive
Ares Capital	16 Very Positive mention(s)	0 Positive mention(s)	0 Neutral mention(s)	2 Negative mention(s)	1 Very Negative mention(s)	Positive

Is CSWC or ARCC more profitable?

Ares Capital has a net margin of 44.94% compared to Capital Southwest's net margin of 39.95%. Capital Southwest's return on equity of 14.17% beat Ares Capital's return on equity.

Company	Net Margins	Return on Equity	Return on Assets
Capital Southwest	39.95%	14.17%	6.77%
Ares Capital	44.94%	10.48%	5.00%

Which has better earnings and valuation, CSWC or ARCC?

Ares Capital has higher revenue and earnings than Capital Southwest. Ares Capital is trading at a lower price-to-earnings ratio than Capital Southwest, indicating that it is currently the more affordable of the two stocks.

Company	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Capital Southwest	$204.44M	6.20	$70.55M	$1.65	13.82
Ares Capital	$1.50B	10.47	$1.52B	$2.05	10.88

Is CSWC or ARCC a better dividend stock?

Capital Southwest pays an annual dividend of $2.32 per share and has a dividend yield of 10.2%. Ares Capital pays an annual dividend of $1.92 per share and has a dividend yield of 8.6%. Capital Southwest pays out 140.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ares Capital pays out 93.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capital Southwest has raised its dividend for 2 consecutive years. Capital Southwest is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Which has more volatility and risk, CSWC or ARCC?

Capital Southwest has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Ares Capital has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Do analysts rate CSWC or ARCC?

Capital Southwest currently has a consensus target price of $24.30, indicating a potential upside of 6.58%. Ares Capital has a consensus target price of $22.86, indicating a potential upside of 2.50%. Given Capital Southwest's stronger consensus rating and higher probable upside, research analysts clearly believe Capital Southwest is more favorable than Ares Capital.

Company	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Capital Southwest	0 Sell rating(s)	1 Hold rating(s)	5 Buy rating(s)	0 Strong Buy rating(s)	2.83
Ares Capital	0 Sell rating(s)	2 Hold rating(s)	7 Buy rating(s)	0 Strong Buy rating(s)	2.78

Do insiders and institutionals hold more shares of CSWC or ARCC?

23.4% of Capital Southwest shares are owned by institutional investors. Comparatively, 27.4% of Ares Capital shares are owned by institutional investors. 2.8% of Capital Southwest shares are owned by company insiders. Comparatively, 0.5% of Ares Capital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Summary

Ares Capital beats Capital Southwest on 10 of the 19 factors compared between the two stocks.