Ares Capital (NASDAQ:ARCC) and Portman Ridge Finance (NASDAQ:PTMN) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, profitability, dividends, institutional ownership, valuation, analyst recommendations and earnings.
This table compares Ares Capital and Portman Ridge Finance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Portman Ridge Finance||-35.34%||5.81%||3.52%|
Valuation and Earnings
This table compares Ares Capital and Portman Ridge Finance’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Ares Capital||$1.34 billion||5.53||$858.00 million||$1.68||10.33|
|Portman Ridge Finance||$27.09 million||4.15||-$9.57 million||$0.27||11.15|
Ares Capital has higher revenue and earnings than Portman Ridge Finance. Ares 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.
Institutional and Insider Ownership
39.3% of Ares Capital shares are owned by institutional investors. Comparatively, 27.6% of Portman Ridge Finance shares are owned by institutional investors. 0.5% of Ares Capital shares are owned by company insiders. Comparatively, 8.1% of Portman Ridge Finance shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
Ares Capital pays an annual dividend of $1.60 per share and has a dividend yield of 9.2%. Portman Ridge Finance pays an annual dividend of $0.40 per share and has a dividend yield of 13.3%. Ares Capital pays out 95.2% 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 pays out 148.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a breakdown of recent recommendations and price targets for Ares Capital and Portman Ridge Finance, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Portman Ridge Finance||0||0||0||0||N/A|
Ares Capital presently has a consensus target price of $19.13, suggesting a potential upside of 10.23%. Given Ares Capital’s higher probable upside, equities research analysts clearly believe Ares Capital is more favorable than Portman Ridge Finance.
Volatility and Risk
Ares Capital has a beta of 0.64, meaning that its share price is 36% less volatile than the S&P 500. Comparatively, Portman Ridge Finance has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.
Ares Capital beats Portman Ridge Finance on 11 of the 15 factors compared between the two stocks.
Ares Capital Company Profile
Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.
Portman Ridge Finance Company Profile
There is no company description available for Portman Ridge Finance Corp.
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