Head-To-Head Contrast: Arlington Asset Investment (AI) & THL Credit (TCRD)

Arlington Asset Investment (NYSE: AI) and THL Credit (NASDAQ:TCRD) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, institutional ownership, risk, dividends, valuation and earnings.

Dividends

Arlington Asset Investment pays an annual dividend of $2.20 per share and has a dividend yield of 19.4%. THL Credit pays an annual dividend of $1.08 per share and has a dividend yield of 13.3%. THL Credit pays out 89.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

Arlington Asset Investment has a beta of 0.65, indicating that its stock price is 35% less volatile than the S&P 500. Comparatively, THL Credit has a beta of 1.04, indicating that its stock price is 4% more volatile than the S&P 500.

Earnings and Valuation

This table compares Arlington Asset Investment and THL Credit’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Arlington Asset Investment $121.25 million 2.63 $17.43 million N/A N/A
THL Credit $78.77 million 3.38 -$7.90 million $1.21 6.74

Arlington Asset Investment has higher revenue and earnings than THL Credit.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Arlington Asset Investment and THL Credit, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Arlington Asset Investment 0 3 1 0 2.25
THL Credit 0 5 0 0 2.00

Arlington Asset Investment currently has a consensus price target of $13.31, suggesting a potential upside of 17.29%. THL Credit has a consensus price target of $10.00, suggesting a potential upside of 22.70%. Given THL Credit’s higher probable upside, analysts plainly believe THL Credit is more favorable than Arlington Asset Investment.

Profitability

This table compares Arlington Asset Investment and THL Credit’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Arlington Asset Investment -36.30% -12.39% -1.03%
THL Credit -9.01% 10.84% 5.92%

Institutional and Insider Ownership

37.0% of Arlington Asset Investment shares are held by institutional investors. Comparatively, 45.0% of THL Credit shares are held by institutional investors. 2.8% of Arlington Asset Investment shares are held by insiders. Comparatively, 0.5% of THL Credit shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

About Arlington Asset Investment

Arlington Asset Investment Corp. (NYSE: AI) is a principal investment firm that currently invests primarily in mortgage-related and other assets. The Company is headquartered in the Washington, D.C. metropolitan area. For more information, please visit www.arlingtonasset.com.

About THL Credit

THL Credit, Inc. 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, primarily through investments in privately negotiated debt and equity securities of lower middle market companies. The Company is a direct lender to lower middle-market companies and invests primarily in directly originated first lien senior secured loans, including unitranche investments. In certain instances, it also makes second lien secured loans and subordinated, or mezzanine, debt investments, which may include an associated equity component, such as warrants, preferred stock or similar securities, and direct equity investments. Its first lien senior secured loans may be structured as traditional first lien senior secured loans or as unitranche loans. The Company’s investment activities are managed by THL Credit Advisors LLC.

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