The Bank of New York Mellon (NYSE:BK) and Prospect Capital (NASDAQ:PSEC) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, valuation, earnings, institutional ownership and profitability.
Analyst Ratings
This is a summary of recent ratings for The Bank of New York Mellon and Prospect Capital, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
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The Bank of New York Mellon | 0 | 5 | 10 | 0 | 2.67 |
Prospect Capital | 2 | 0 | 0 | 0 | 1.00 |
The Bank of New York Mellon currently has a consensus price target of $49.1333, indicating a potential upside of 5.48%. Prospect Capital has a consensus price target of $4.50, indicating a potential downside of 43.18%. Given The Bank of New York Mellon's stronger consensus rating and higher possible upside, analysts clearly believe The Bank of New York Mellon is more favorable than Prospect Capital.
Risk & Volatility
The Bank of New York Mellon has a beta of 1.07, suggesting that its share price is 7% more volatile than the S&P 500. Comparatively, Prospect Capital has a beta of 0.97, suggesting that its share price is 3% less volatile than the S&P 500.
Valuation & Earnings
This table compares The Bank of New York Mellon and Prospect Capital's top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
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The Bank of New York Mellon | $20.77 billion | 1.97 | $4.44 billion | $4.02 | 11.59 |
Prospect Capital | $623.53 million | 4.92 | $-16,220,000.00 | $0.72 | 11.00 |
The Bank of New York Mellon has higher revenue and earnings than Prospect Capital. Prospect Capital is trading at a lower price-to-earnings ratio than The Bank of New York Mellon, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
82.3% of The Bank of New York Mellon shares are owned by institutional investors. Comparatively, 10.3% of Prospect Capital shares are owned by institutional investors. 0.1% of The Bank of New York Mellon shares are owned by insiders. Comparatively, 26.8% of Prospect Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Dividends
The Bank of New York Mellon pays an annual dividend of $1.24 per share and has a dividend yield of 2.7%. Prospect Capital pays an annual dividend of $0.72 per share and has a dividend yield of 9.1%. The Bank of New York Mellon pays out 30.8% of its earnings in the form of a dividend. Prospect Capital pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. The Bank of New York Mellon has increased its dividend for 1 consecutive years and Prospect Capital has increased its dividend for 1 consecutive years.
Profitability
This table compares The Bank of New York Mellon and Prospect Capital's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
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The Bank of New York Mellon | 23.09% | 9.89% | 0.89% |
Prospect Capital | 22.08% | 8.16% | 4.72% |
Summary
The Bank of New York Mellon beats Prospect Capital on 11 of the 16 factors compared between the two stocks.