Horizon Technology Finance Corporation (NASDAQ: HRZN) and StoneCastle Financial Corp (NASDAQ:BANX) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.
Institutional and Insider Ownership
18.2% of Horizon Technology Finance Corporation shares are owned by institutional investors. Comparatively, 34.0% of StoneCastle Financial Corp shares are owned by institutional investors. 1.3% of Horizon Technology Finance Corporation shares are owned by company insiders. Comparatively, 8.0% of StoneCastle Financial Corp shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
This is a breakdown of recent recommendations and price targets for Horizon Technology Finance Corporation and StoneCastle Financial Corp, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Horizon Technology Finance Corporation||1||3||1||0||2.00|
|StoneCastle Financial Corp||0||0||4||0||3.00|
Horizon Technology Finance Corporation currently has a consensus target price of $10.75, indicating a potential downside of 0.56%. StoneCastle Financial Corp has a consensus target price of $22.38, indicating a potential upside of 9.36%. Given StoneCastle Financial Corp’s stronger consensus rating and higher probable upside, analysts clearly believe StoneCastle Financial Corp is more favorable than Horizon Technology Finance Corporation.
Risk & Volatility
Horizon Technology Finance Corporation has a beta of 0.82, indicating that its share price is 18% less volatile than the S&P 500. Comparatively, StoneCastle Financial Corp has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.
Valuation and Earnings
This table compares Horizon Technology Finance Corporation and StoneCastle Financial Corp’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Horizon Technology Finance Corporation||N/A||N/A||N/A||($0.16)||-67.56|
|StoneCastle Financial Corp||N/A||N/A||N/A||$1.74||11.76|
Horizon Technology Finance Corporation is trading at a lower price-to-earnings ratio than StoneCastle Financial Corp, indicating that it is currently the more affordable of the two stocks.
This table compares Horizon Technology Finance Corporation and StoneCastle Financial Corp’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Horizon Technology Finance Corporation||-6.72%||10.24%||6.29%|
|StoneCastle Financial Corp||66.25%||N/A||N/A|
Horizon Technology Finance Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 11.1%. StoneCastle Financial Corp pays an annual dividend of $1.48 per share and has a dividend yield of 7.2%. Horizon Technology Finance Corporation pays out -750.0% of its earnings in the form of a dividend. StoneCastle Financial Corp pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Horizon Technology Finance Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
StoneCastle Financial Corp beats Horizon Technology Finance Corporation on 8 of the 13 factors compared between the two stocks.
Horizon Technology Finance Corporation Company Profile
Horizon Technology Finance Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to maximize investment portfolio’s total return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. It lends to and invests in development-stage companies in the technology, life science, healthcare information and services and cleantech industries (collectively Target Industries). It is focused on making secured debt investments (Venture Loans) to venture capital backed companies in its Target Industries. As of December 31, 2016, its debt investment portfolio consisted of 44 debt investments. As of December 31, 2016, the Company held warrants to purchase stock, predominantly preferred stock, in 78 portfolio companies, equity positions in five portfolio companies and success fee arrangements in 11 portfolio companies.
StoneCastle Financial Corp Company Profile
StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.
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