Rand Capital (NASDAQ:RAND) and Pennantpark Floating Rate Capital (NASDAQ:PFLT) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, analyst recommendations, dividends, valuation, risk, profitability and institutional ownership.
Valuation & Earnings
This table compares Rand Capital and Pennantpark Floating Rate Capital’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Rand Capital||$2.11 million||8.12||-$390,000.00||N/A||N/A|
|Pennantpark Floating Rate Capital||$72.21 million||6.27||$33.49 million||$1.06||11.02|
Pennantpark Floating Rate Capital has higher revenue and earnings than Rand Capital.
This table compares Rand Capital and Pennantpark Floating Rate Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Pennantpark Floating Rate Capital||16.65%||8.83%||4.37%|
Volatility and Risk
Rand Capital has a beta of 0.06, indicating that its stock price is 94% less volatile than the S&P 500. Comparatively, Pennantpark Floating Rate Capital has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500.
This is a breakdown of current ratings and price targets for Rand Capital and Pennantpark Floating Rate Capital, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Pennantpark Floating Rate Capital||0||2||2||0||2.50|
Pennantpark Floating Rate Capital has a consensus price target of $13.63, suggesting a potential upside of 16.65%. Given Pennantpark Floating Rate Capital’s higher possible upside, analysts plainly believe Pennantpark Floating Rate Capital is more favorable than Rand Capital.
Pennantpark Floating Rate Capital pays an annual dividend of $1.14 per share and has a dividend yield of 9.8%. Rand Capital does not pay a dividend. Pennantpark Floating Rate Capital pays out 107.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Institutional & Insider Ownership
13.0% of Rand Capital shares are owned by institutional investors. Comparatively, 35.7% of Pennantpark Floating Rate Capital shares are owned by institutional investors. 9.7% of Rand Capital shares are owned by company insiders. Comparatively, 1.0% of Pennantpark Floating Rate Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Pennantpark Floating Rate Capital beats Rand Capital on 10 of the 13 factors compared between the two stocks.
Rand Capital Company Profile
Rand Capital Corporation is a business development company specializing in venture capital and private equity investments. The firm prefers to make investments through equity or debt instruments in early venture, expansion stage, and in small to medium-sized privately held companies. It generally lends to more mature companies. The firm does not prefer to invest in real estate sector. It invests in companies that are engaged in the exploitation of new or unique products, technologies, or services. The firm invests in healthcare, consumer products, manufacturing, software, and professional services. It seeks to invest in companies based in the Western and Upstate New York region and its surrounding states with focus on Buffalo and Niagara region. The firm may invest in region within three to five hour drives from Western New York including Canada. It typically invests between $0.5 million and $1.5 million and the total investment in rounds is between $1 million and $5 million. The firm seeks to invest up to maximum of $3 million total per company as part of follow-on investments. It invest in startups and companies having annual revenue up to $10 million. The firm seeks to be a lead investor in companies within its geographical area and participates in syndicate/co-invest with other investors outside it. It prefers to invest in businesses that are unique or possess proprietary right. The firm prefers to be a minority investor and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period of five to seven years. Rand Capital Corporation was founded in 1969 and is based in Buffalo, New York.
Pennantpark Floating Rate Capital Company Profile
PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. It primarily invests in the United States and to a limited extent non-U.S. companies. The fund typically invests between $2 million and $20 million. The fund also invests in equity securities, such as preferred stock, common stock, warrants or options received in connection with debt investments or through direct investments. It primarily invests between $10 million and $50 million in investments in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies. The companies if rated would be between BB and CCC under the Standard & Poor's system. The fund invests 30% is invested in non-qualifying assets like investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million, securities of middle-market companies located outside of the United States, high-yield bonds, distressed debt, private equity, securities of public companies that are not thinly traded, and investment companies as defined in the 1940 Act. Under normal conditions, the fund expects atleast 80 percent of its net assets plus any borrowings for investment purposes to be invested in Floating Rate Loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65 percent of its portfolio through senior secured loans. In case of floating rate loans, it holds investments for a period of three to ten years.
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