Reviewing Palmer Square Capital BDC (NYSE:PSBD) & Fidus Investment (NASDAQ:FDUS)

Fidus Investment (NASDAQ:FDUS) and Palmer Square Capital BDC (NYSE:PSBD) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Risk and Volatility

Fidus Investment has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500. Comparatively, Palmer Square Capital BDC has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Valuation & Earnings

This table compares Fidus Investment and Palmer Square Capital BDC”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fidus Investment	$146.15 million	4.87	$78.29 million	$2.36	8.28
Palmer Square Capital BDC	$18.74 million	20.25	$47.67 million	$0.43	28.03

Fidus Investment has higher revenue and earnings than Palmer Square Capital BDC. Fidus Investment is trading at a lower price-to-earnings ratio than Palmer Square Capital BDC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fidus Investment and Palmer Square Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fidus Investment	54.03%	10.91%	6.04%
Palmer Square Capital BDC	10.85%	10.77%	4.10%

Institutional and Insider Ownership

28.1% of Fidus Investment shares are owned by institutional investors. Comparatively, 6.5% of Palmer Square Capital BDC shares are owned by institutional investors. 0.9% of Fidus Investment shares are owned by company insiders. Comparatively, 1.1% of Palmer Square Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Fidus Investment and Palmer Square Capital BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fidus Investment	0	2	1	1	2.75
Palmer Square Capital BDC	0	4	0	0	2.00

Fidus Investment presently has a consensus target price of $21.75, suggesting a potential upside of 11.37%. Palmer Square Capital BDC has a consensus target price of $13.00, suggesting a potential upside of 7.84%. Given Fidus Investment’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Fidus Investment is more favorable than Palmer Square Capital BDC.

Dividends

Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 8.8%. Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 11.9%. Fidus Investment pays out 72.9% of its earnings in the form of a dividend. Palmer Square Capital BDC pays out 334.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Fidus Investment beats Palmer Square Capital BDC on 13 of the 17 factors compared between the two stocks.

About Fidus Investment

Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.