Alcentra Capital (NASDAQ:ABDC) and Oaktree Capital Group (NYSE:OAK) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, earnings, risk, analyst recommendations, valuation and dividends.
Alcentra Capital pays an annual dividend of $0.72 per share and has a dividend yield of 10.6%. Oaktree Capital Group pays an annual dividend of $2.80 per share and has a dividend yield of 6.9%. Alcentra Capital pays out 54.5% of its earnings in the form of a dividend. Oaktree Capital Group pays out 70.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oaktree Capital Group has increased its dividend for 3 consecutive years. Alcentra Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider & Institutional Ownership
29.0% of Alcentra Capital shares are held by institutional investors. Comparatively, 27.0% of Oaktree Capital Group shares are held by institutional investors. 0.6% of Alcentra Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Alcentra Capital and Oaktree Capital Group’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Alcentra Capital||$33.35 million||2.76||-$19.10 million||$1.32||5.16|
|Oaktree Capital Group||$1.47 billion||4.34||$231.49 million||$3.97||10.22|
Oaktree Capital Group has higher revenue and earnings than Alcentra Capital. Alcentra Capital is trading at a lower price-to-earnings ratio than Oaktree Capital Group, indicating that it is currently the more affordable of the two stocks.
Volatility & Risk
Alcentra Capital has a beta of 0.47, indicating that its stock price is 53% less volatile than the S&P 500. Comparatively, Oaktree Capital Group has a beta of 0.53, indicating that its stock price is 47% less volatile than the S&P 500.
This is a summary of current recommendations and price targets for Alcentra Capital and Oaktree Capital Group, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Oaktree Capital Group||0||5||1||0||2.17|
Alcentra Capital presently has a consensus price target of $7.00, suggesting a potential upside of 2.79%. Oaktree Capital Group has a consensus price target of $45.25, suggesting a potential upside of 11.56%. Given Oaktree Capital Group’s stronger consensus rating and higher possible upside, analysts plainly believe Oaktree Capital Group is more favorable than Alcentra Capital.
This table compares Alcentra Capital and Oaktree Capital Group’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Oaktree Capital Group||13.96%||14.03%||3.09%|
Oaktree Capital Group beats Alcentra Capital on 12 of the 17 factors compared between the two stocks.
Alcentra Capital Company Profile
Alcentra Capital Corporation is a business development company specializing in investments in lower middle-market companies. The fund seeks to invest in healthcare, business services, defense, government services, telecom and technology, media, infrastructure maintenance and logistics, and oil and gas services sector. It focuses on investment opportunities headquartered in the United States. The fund seeks to invest $5 million to $15 million per transaction in companies with EBITDA between $5 million to $15 million and revenues of between $10 million and $100 million. It invests in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments.
Oaktree Capital Group Company Profile
Oaktree Capital Group, LLC operates as a global investment management firm that focuses on alternative markets. It manage investments in a number of strategies within six asset classes, including distressed debt; corporate debt, including high yield debt and senior loans; control investing; convertible securities; real estate; and listed equities. The company pursues these strategies through closed-end, open-end, and evergreen funds. Oaktree Capital Group, LLC was incorporated on May 15, 2007 and is headquartered in Los Angeles, California.
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