Pzena Investment Management (NYSE:PZN) and Fidus Investment (NASDAQ:FDUS) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, analyst recommendations, valuation and institutional ownership.
This table compares Pzena Investment Management and Fidus Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pzena Investment Management||8.98%||15.14%||8.88%|
Institutional and Insider Ownership
16.9% of Pzena Investment Management shares are owned by institutional investors. Comparatively, 28.8% of Fidus Investment shares are owned by institutional investors. 50.5% of Pzena Investment Management shares are owned by insiders. Comparatively, 1.3% of Fidus Investment shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Risk & Volatility
Pzena Investment Management has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 1.23, indicating that its share price is 23% more volatile than the S&P 500.
Pzena Investment Management pays an annual dividend of $0.12 per share and has a dividend yield of 1.3%. Fidus Investment pays an annual dividend of $1.56 per share and has a dividend yield of 10.1%. Pzena Investment Management pays out 15.6% of its earnings in the form of a dividend. Fidus Investment pays out 109.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidus Investment has increased its dividend for 4 consecutive years. Fidus Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Earnings and Valuation
This table compares Pzena Investment Management and Fidus Investment’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Pzena Investment Management||$153.58 million||4.18||$13.79 million||$0.77||11.86|
|Fidus Investment||$76.43 million||4.92||$49.45 million||$1.42||10.82|
Fidus Investment has lower revenue, but higher earnings than Pzena Investment Management. Fidus Investment is trading at a lower price-to-earnings ratio than Pzena Investment Management, indicating that it is currently the more affordable of the two stocks.
This is a summary of recent ratings and price targets for Pzena Investment Management and Fidus Investment, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pzena Investment Management||0||0||0||0||N/A|
Fidus Investment has a consensus price target of $16.00, indicating a potential upside of 4.10%. Given Fidus Investment’s higher possible upside, analysts clearly believe Fidus Investment is more favorable than Pzena Investment Management.
Fidus Investment beats Pzena Investment Management on 9 of the 15 factors compared between the two stocks.
About Pzena Investment Management
Pzena Investment Management, Inc. is a publicly owned investment manager. The firm manages equity mutual funds for its clients. It invests in the public equity markets. Pzena Investment Management, Inc. was founded in 2007 and is based in New York City with additional offices in Melbourne, Australia and London, United Kingdom.
About Fidus Investment
Fidus Investment Corporation is a business development company specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.
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