OFS Capital (NASDAQ: OFS) and Capitala Finance (NASDAQ:CPTA) are both small-cap financials companies, but which is the better business? We will compare the two companies based on the strength of their earnings, valuation, risk, institutional ownership, dividends, profitability and analyst recommendations.
OFS Capital pays an annual dividend of $1.36 per share and has a dividend yield of 11.2%. Capitala Finance pays an annual dividend of $1.00 per share and has a dividend yield of 13.5%. OFS Capital pays out 149.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Capitala Finance pays out 909.1% 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 table compares OFS Capital and Capitala Finance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and recommmendations for OFS Capital and Capitala Finance, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
OFS Capital currently has a consensus target price of $14.67, indicating a potential upside of 20.61%. Capitala Finance has a consensus target price of $13.50, indicating a potential upside of 82.19%. Given Capitala Finance’s higher probable upside, analysts clearly believe Capitala Finance is more favorable than OFS Capital.
Institutional & Insider Ownership
28.1% of OFS Capital shares are owned by institutional investors. Comparatively, 19.3% of Capitala Finance shares are owned by institutional investors. 0.0% of OFS Capital shares are owned by insiders. Comparatively, 8.4% of Capitala Finance shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
Risk and Volatility
OFS Capital has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500. Comparatively, Capitala Finance has a beta of 0.97, meaning that its share price is 3% less volatile than the S&P 500.
Valuation and Earnings
This table compares OFS Capital and Capitala Finance’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|OFS Capital||$31.09 million||5.22||$13.82 million||$0.91||13.36|
|Capitala Finance||$68.31 million||1.73||$9.15 million||$0.11||67.36|
OFS Capital has higher earnings, but lower revenue than Capitala Finance. OFS Capital is trading at a lower price-to-earnings ratio than Capitala Finance, indicating that it is currently the more affordable of the two stocks.
OFS Capital beats Capitala Finance on 10 of the 16 factors compared between the two stocks.
OFS Capital Company Profile
OFS Capital Corporation (OFS Capital) is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to provide its shareholders with both current income and capital appreciation primarily through debt investments and equity investments. It focuses primarily on middle-market companies in the United States, including senior secured loans, including first-lien, second-lien and unitranche loans, as well as subordinated loans, and warrants and other minority equity securities. The Company may make investments directly or through OFS SBIC I, LP (SBIC I LP), its investment company subsidiary. It focuses on investments in loans, in which OFS Advisor’s investment professionals have expertise, including investments in first-lien, unitranche, second-lien, and mezzanine loans and, to a lesser extent, on warrants and other equity securities. The Company’s investment activities are managed by OFS Capital Management, LLC (OFS Advisor).
Capitala Finance Company Profile
Capitala Finance Corp. is an externally managed non-diversified, closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. Both directly and through its subsidiaries that are licensed by the United States Small Business Administration (SBA), the Company offers financing to business owners, management teams and financial sponsors for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives. The Company provides capital to lower and traditional middle-market companies in the United States, with a non-exclusive emphasis on the Southeast, Southwest and Mid-Atlantic regions. The Company invests in first lien, second lien and subordinated loans. The Company’s investment advisor is Capitala Investment Advisors, LLC.
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