Critical Analysis: Fidus Investment (NASDAQ:FDUS) versus Blue Owl Capital (NYSE:OWL)

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

Dividends

Blue Owl Capital pays an annual dividend of $0.92 per share and has a dividend yield of 8.9%. Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 8.9%. Blue Owl Capital pays out 657.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidus Investment pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blue Owl Capital has increased its dividend for 4 consecutive years. Blue Owl Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Blue Owl Capital	3.08%	24.26%	11.38%
Fidus Investment	45.36%	10.87%	5.64%

Insider and Institutional Ownership

35.9% of Blue Owl Capital shares are held by institutional investors. Comparatively, 28.1% of Fidus Investment shares are held by institutional investors. 25.7% of Blue Owl Capital shares are held by company insiders. Comparatively, 0.9% of Fidus Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Blue Owl Capital and Fidus Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blue Owl Capital	0	9	7	1	2.53
Fidus Investment	0	2	0	0	2.00

Blue Owl Capital currently has a consensus target price of $13.12, indicating a potential upside of 27.10%. Fidus Investment has a consensus target price of $19.50, indicating a potential upside of 0.98%. Given Blue Owl Capital’s stronger consensus rating and higher possible upside, research analysts clearly believe Blue Owl Capital is more favorable than Fidus Investment.

Volatility and Risk

Blue Owl Capital has a beta of 1.31, meaning that its stock price is 31% more volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Earnings and Valuation

This table compares Blue Owl Capital and Fidus Investment”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blue Owl Capital	$2.87 billion	5.61	$78.83 million	$0.14	73.71
Fidus Investment	$155.87 million	4.70	$82.40 million	$2.09	9.24

Fidus Investment has lower revenue, but higher earnings than Blue Owl Capital. Fidus Investment 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.

Summary

Blue Owl Capital beats Fidus Investment on 14 of the 18 factors compared between the two stocks.

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.

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.