Portman Ridge Finance (NASDAQ:PTMN) and THL Credit (NASDAQ:TCRD) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, dividends, earnings, profitability, analyst recommendations, institutional ownership and valuation.
Earnings & Valuation
This table compares Portman Ridge Finance and THL Credit’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Portman Ridge Finance||$27.09 million||2.99||-$9.57 million||$0.27||8.04|
|THL Credit||$66.94 million||3.10||-$10.60 million||$1.07||6.25|
This table compares Portman Ridge Finance and THL Credit’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Portman Ridge Finance||-86.64%||2.41%||1.27%|
Insider and Institutional Ownership
23.2% of Portman Ridge Finance shares are held by institutional investors. Comparatively, 49.2% of THL Credit shares are held by institutional investors. 6.3% of Portman Ridge Finance shares are held by company insiders. Comparatively, 0.6% of THL Credit shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Portman Ridge Finance pays an annual dividend of $0.24 per share and has a dividend yield of 11.1%. THL Credit pays an annual dividend of $0.84 per share and has a dividend yield of 12.6%. Portman Ridge Finance pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. THL Credit pays out 78.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. THL Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a breakdown of current ratings and recommmendations for Portman Ridge Finance and THL Credit, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Portman Ridge Finance||0||0||0||0||N/A|
THL Credit has a consensus target price of $7.00, indicating a potential upside of 4.63%. Given THL Credit’s higher probable upside, analysts plainly believe THL Credit is more favorable than Portman Ridge Finance.
Risk & Volatility
Portman Ridge Finance has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500. Comparatively, THL Credit has a beta of 1.06, suggesting that its share price is 6% more volatile than the S&P 500.
THL Credit beats Portman Ridge Finance on 11 of the 14 factors compared between the two stocks.
About Portman Ridge Finance
Portman Ridge Finance Corp. is a private equity fund and non-diversified closed-end investment company that invests in middle market companies generating consistent cash flows located in North America. It targets companies operating across a broad range of sectors such as aerospace and defense, automotive, beverage, food and tobacco, broadcasting and entertainment, buildings and real estate, personal and cargo transport, chemicals, plastics and rubber, containers, packaging and glass, diversified or conglomerate service, ecological, electronics, finance, and healthcare. The company was founded on August 8, 2006 and is headquartered in New York, NY.
About THL Credit
THL Credit, Inc. is a business development company specializing in direct and fund of fund investments. The fund seeks to invest in debt and equity securities of middle market companies. It seeks to invest in PIPES, growth, acquisition, market or product expansion, recapitalization, mature, and change of control transactions in both sponsored and unsponsored issuers. The fund does not intend to invest in start-up companies, operationally distressed situations, or companies with speculative business plans. The fund invests primarily in debt securities, including unsecured subordinated or mezzanine debt and second lien secured debt, which may include an associated equity component such as warrants, preferred stock, options to buy minority interest, and other similar securities. Its investments may also include high-yield bonds, private equity investments, securities of public companies that are broadly traded, and securities of non-United States companies. It seeks to invest in outsourced business services, healthcare, financials, retailing, media, and consumer discretionary. The fund may make direct equity investments, including equity investments into or through funds, and also selectively invest in syndicated first lien secured loans, including unitranche investments. It seeks to invest between $10 million and $25 million of capital per transaction in companies with annual revenues ranging from $25 million to $500 million and annual EBITDA between $5 million and $25 million. The fund prefers to be a lead or sole investor in a transaction.
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