Portman Ridge Finance (NASDAQ:PTMN) and PennantPark Floating Rate Capital (NASDAQ:PFLT) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, analyst recommendations, valuation, profitability and risk.
Insider and Institutional Ownership
12.8% of Portman Ridge Finance shares are owned by institutional investors. Comparatively, 29.3% of PennantPark Floating Rate Capital shares are owned by institutional investors. 4.7% of Portman Ridge Finance shares are owned by insiders. Comparatively, 2.0% of PennantPark Floating Rate Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Analyst Ratings
This is a summary of recent ratings and target prices for Portman Ridge Finance and PennantPark Floating Rate Capital, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
|---|
| Portman Ridge Finance | 0 | 1 | 0 | 0 | 2.00 |
| PennantPark Floating Rate Capital | 0 | 1 | 2 | 0 | 2.67 |
Portman Ridge Finance currently has a consensus price target of $2.00, indicating a potential downside of 16.32%. PennantPark Floating Rate Capital has a consensus price target of $10.50, indicating a potential downside of 17.13%. Given Portman Ridge Finance's higher possible upside, analysts clearly believe Portman Ridge Finance is more favorable than PennantPark Floating Rate Capital.
Earnings & Valuation
This table compares Portman Ridge Finance and PennantPark Floating Rate Capital's gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
|---|
| Portman Ridge Finance | $26.50 million | 6.78 | $-12,500,000.00 | $0.08 | 29.88 |
| PennantPark Floating Rate Capital | $95.49 million | 5.14 | $18.41 million | $1.12 | 11.31 |
PennantPark Floating Rate Capital has higher revenue and earnings than Portman Ridge Finance. PennantPark Floating Rate Capital is trading at a lower price-to-earnings ratio than Portman Ridge Finance, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Portman Ridge Finance has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, PennantPark Floating Rate Capital has a beta of 1.97, indicating that its stock price is 97% more volatile than the S&P 500.
Profitability
This table compares Portman Ridge Finance and PennantPark Floating Rate Capital's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
|---|
| Portman Ridge Finance | -47.13% | 7.87% | 3.40% |
| PennantPark Floating Rate Capital | 19.28% | 9.04% | 3.59% |
Dividends
Portman Ridge Finance pays an annual dividend of $0.24 per share and has a dividend yield of 10.0%. PennantPark Floating Rate Capital pays an annual dividend of $1.14 per share and has a dividend yield of 9.0%. Portman Ridge Finance pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennantPark Floating Rate Capital pays out 101.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Portman Ridge Finance has increased its dividend for 1 consecutive years and PennantPark Floating Rate Capital has increased its dividend for 1 consecutive years.
Summary
PennantPark Floating Rate Capital beats Portman Ridge Finance on 12 of the 16 factors compared between the two stocks.
