Contrasting Nomura (NYSE:NMR) and FS KKR Capital (NYSE:FSK)

FS KKR Capital (NYSE:FSK) and Nomura (NYSE:NMR) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, valuation, dividends, risk, profitability and institutional ownership.

Analyst Recommendations

This is a summary of recent recommendations and price targets for FS KKR Capital and Nomura, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS KKR Capital	2	6	0	0	1.75
Nomura	0	1	4	1	3.00

FS KKR Capital presently has a consensus price target of $11.64, indicating a potential downside of 2.04%. Nomura has a consensus price target of $10.20, indicating a potential upside of 5.10%. Given Nomura’s stronger consensus rating and higher possible upside, analysts plainly believe Nomura is more favorable than FS KKR Capital.

Earnings & Valuation

This table compares FS KKR Capital and Nomura”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS KKR Capital	$1.52 billion	2.13	$11.00 million	($1.85)	-6.42
Nomura	$31.61 billion	0.90	$2.39 billion	$0.86	11.28

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

Dividends

FS KKR Capital pays an annual dividend of $1.76 per share and has a dividend yield of 14.8%. Nomura pays an annual dividend of $0.24 per share and has a dividend yield of 2.5%. FS KKR Capital pays out -95.1% of its earnings in the form of a dividend. Nomura pays out 27.9% 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. FS KKR Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

FS KKR Capital has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Nomura has a beta of 0.81, meaning that its share price is 19% less volatile than the S&P 500.

Profitability

This table compares FS KKR Capital and Nomura’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS KKR Capital	-41.75%	9.59%	4.06%
Nomura	8.06%	10.51%	0.63%

Institutional & Insider Ownership

36.3% of FS KKR Capital shares are held by institutional investors. Comparatively, 15.1% of Nomura shares are held by institutional investors. 0.2% of FS KKR Capital shares are held by company insiders. Comparatively, 0.0% of Nomura shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Nomura beats FS KKR Capital on 10 of the 17 factors compared between the two stocks.

About FS KKR Capital

FS KKR Capital Corp. is a business development company that provides financing to privately held middle-market businesses, primarily in the United States. Its investments include senior secured and subordinated loans, as well as equity and other interests in portfolio companies. The company is externally managed by FS/KKR Advisor, LLC, an investment adviser formed by FS Investments and KKR. FS KKR Capital was created in 2018 through the merger of FS Investment Corporation and Corporate Capital Trust.

About Nomura

Nomura Holdings, Inc. is a Japan-based financial services group headquartered in Tokyo. Its roots date to 1925, when the securities business of Osaka Nomura Bank was established; the group has since grown into an international provider of financial services. Nomura’s main businesses include wealth management, asset management and wholesale services. It serves individual clients with investment products and advice, manages investment funds for individuals and institutions, and provides institutional clients with global markets services and investment banking capabilities, including trading, financing and advisory services.