Capital Southwest (CSWC) Competitors

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

Which has more risk and volatility, CSWC or ARCC?

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

Does the media favor CSWC or ARCC?

In the previous week, Ares Capital had 8 more articles in the media than Capital Southwest. MarketBeat recorded 20 mentions for Ares Capital and 12 mentions for Capital Southwest. Ares Capital's average media sentiment score of 1.03 beat Capital Southwest's score of 0.83 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	5 Very Positive mention(s)	1 Positive mention(s)	4 Neutral mention(s)	1 Negative mention(s)	0 Very Negative mention(s)	Positive
Ares Capital	15 Very Positive mention(s)	0 Positive mention(s)	1 Neutral mention(s)	2 Negative mention(s)	1 Very Negative mention(s)	Positive

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

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

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 9.1%. 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 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.

Do analysts rate CSWC or ARCC?

Capital Southwest currently has a consensus price target of $24.30, suggesting a potential upside of 6.58%. Ares Capital has a consensus price target of $22.86, suggesting a potential upside of 8.04%. Given Ares Capital's higher probable upside, analysts clearly believe Ares Capital is more favorable than Capital Southwest.

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

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 preferable earnings & 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	9.94	$1.52B	$2.05	10.32

Summary

Ares Capital beats Capital Southwest on 11 of the 19 factors compared between the two stocks.