Blue Owl Capital (NYSE:OWL) & Prospect Capital (NASDAQ:PSEC) Head-To-Head Survey

Prospect Capital (NASDAQ:PSEC) and Blue Owl Capital (NYSE:OWL) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Earnings and Valuation

This table compares Prospect Capital and Blue Owl Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prospect Capital	$719.44 million	1.57	-$469.92 million	($0.37)	-6.11
Blue Owl Capital	$2.94 billion	5.41	$78.83 million	$0.12	85.21

Blue Owl Capital has higher revenue and earnings than Prospect Capital. Prospect Capital is trading at a lower price-to-earnings ratio than Blue Owl Capital, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

9.1% of Prospect Capital shares are owned by institutional investors. Comparatively, 35.8% of Blue Owl Capital shares are owned by institutional investors. 0.0% of Prospect Capital shares are owned by insiders. Comparatively, 25.7% of Blue Owl Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Prospect Capital pays an annual dividend of $0.54 per share and has a dividend yield of 23.9%. Blue Owl Capital pays an annual dividend of $0.92 per share and has a dividend yield of 9.0%. Prospect Capital pays out -145.9% of its earnings in the form of a dividend. Blue Owl Capital pays out 766.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blue Owl Capital has increased its dividend for 4 consecutive years. Prospect Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of current ratings and target prices for Prospect Capital and Blue Owl Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prospect Capital	2	0	0	0	1.00
Blue Owl Capital	1	7	7	1	2.50

Prospect Capital currently has a consensus price target of $2.00, indicating a potential downside of 11.50%. Blue Owl Capital has a consensus price target of $14.50, indicating a potential upside of 41.81%. Given Blue Owl Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Blue Owl Capital is more favorable than Prospect Capital.

Volatility & Risk

Prospect Capital has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Blue Owl Capital has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500.

Profitability

This table compares Prospect Capital and Blue Owl Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prospect Capital	-10.42%	12.03%	5.43%
Blue Owl Capital	2.96%	21.97%	10.79%

Summary

Blue Owl Capital beats Prospect Capital on 16 of the 18 factors compared between the two stocks.

About Prospect Capital

Prospect Capital Corporation is a business development company. It specializes in middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions. It also makes real estate investments particularly in multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses. It focuses on both primary origination and secondary loans/portfolios and invests in situations like debt financings for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, real estate financings/investments. It also focuses on investing in small-sized and medium-sized private companies rather than large public companies. The fund typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors. It invests in aerospace and defense, chemicals, conglomerate services, consumer services, ecological, electronics, financial services, machinery, manufacturing, media, pharmaceuticals, retail, software, specialty minerals, textiles and leather, transportation, oil and gas production, coal production, materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors. It prefers to invest in the United States and Canada. The fund seeks to invest between $10 million to $500 million per transaction in companies with EBITDA between $5 million and $150 million, sales value between $25 million and $500 million, and enterprise value between $5 million and $1000 million. It fund also co-invests for larger deals. The fund seeks control acquisitions by providing multiple levels of the capital structure. The fund focuses on sole, agented, club, or syndicated deals.

About Blue Owl Capital

Blue Owl Capital Inc. operates as an asset manager in the United States. The company offers permanent capital base solutions that enables it to offer holistic framework of capital solutions to middle market companies, large alternative asset managers, and corporate real estate owners and tenants. It also provides direct lending products that offer private credit products comprising diversified, technology, first lien, and opportunistic lending to middle-market companies; liquid credit; GP strategic capital products, which offers capital solutions, including GP minority stakes, GP debt financing, and professional sports minority stakes; and real estate products that focuses on acquiring triple net lease real estate by investment grade or creditworthy tenants. It offers its solutions through permanent capital vehicles, as well as long-dated private funds. Blue Owl Capital Inc. is headquartered in New York, New York.