Capital Southwest (CSWC) Competitors

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

Do institutionals & insiders have more ownership in ARCC or CSWC?

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

Is ARCC or CSWC more profitable?

Ares Capital has a net margin of 44.94% compared to Capital Southwest's net margin of 34.51%. Capital Southwest's return on equity of 14.40% beat Ares Capital's return on equity.

Company	Net Margins	Return on Equity	Return on Assets
Ares Capital	44.94%	10.48%	5.00%
Capital Southwest	34.51%	14.40%	6.93%

Does the media refer more to ARCC or CSWC?

In the previous week, Ares Capital had 41 more articles in the media than Capital Southwest. MarketBeat recorded 42 mentions for Ares Capital and 1 mentions for Capital Southwest. Capital Southwest's average media sentiment score of 0.95 beat Ares Capital's score of 0.90 indicating that Capital Southwest is being referred to more favorably in the news media.

Company	Very Positive	Positive	Neutral	Negative	Very Negative	Overall Sentiment
Ares Capital	19 Very Positive mention(s)	6 Positive mention(s)	8 Neutral mention(s)	1 Negative mention(s)	0 Very Negative mention(s)	Positive
Capital Southwest	0 Very Positive mention(s)	0 Positive mention(s)	1 Neutral mention(s)	0 Negative mention(s)	0 Very Negative mention(s)	Positive

Which has higher valuation and earnings, ARCC or CSWC?

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
Ares Capital	$1.50B	10.52	$1.52B	$2.05	10.93
Capital Southwest	$204.44M	5.90	$70.55M	$1.48	15.18

Do analysts rate ARCC or CSWC?

Ares Capital currently has a consensus price target of $22.86, suggesting a potential upside of 2.04%. Capital Southwest has a consensus price target of $24.00, suggesting a potential upside of 6.81%. Given Capital Southwest's stronger consensus rating and higher probable upside, analysts clearly believe Capital Southwest is more favorable than Ares Capital.

Company	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Capital	0 Sell rating(s)	2 Hold rating(s)	7 Buy rating(s)	0 Strong Buy rating(s)	2.78
Capital Southwest	0 Sell rating(s)	1 Hold rating(s)	4 Buy rating(s)	1 Strong Buy rating(s)	3.00

Which has more volatility & risk, ARCC or CSWC?

Ares Capital has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500. Comparatively, Capital Southwest has a beta of 0.98, suggesting that its share price is 2% less volatile than the S&P 500.

Is ARCC or CSWC a better dividend stock?

Ares Capital pays an annual dividend of $1.92 per share and has a dividend yield of 8.6%. Capital Southwest pays an annual dividend of $2.32 per share and has a dividend yield of 10.3%. 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 pays out 156.8% 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 increased 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.

Summary

Capital Southwest beats Ares Capital on 11 of the 20 factors compared between the two stocks.