Head to Head Review: Saratoga Investment (NYSE:SAR) and Trinity Capital (NASDAQ:TRIN)

Saratoga Investment (NYSE:SAR) and Trinity Capital (NASDAQ:TRIN) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, valuation and profitability.

Dividends

Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.6%. Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 13.5%. Saratoga Investment pays out 123.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Trinity Capital pays out 104.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Trinity Capital has raised its dividend for 1 consecutive years.

Valuation & Earnings

This table compares Saratoga Investment and Trinity Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saratoga Investment	$148.85 million	2.40	$28.09 million	$2.44	9.03
Trinity Capital	$293.65 million	4.27	$135.60 million	$1.96	7.69

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

Volatility and Risk

Saratoga Investment has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Trinity Capital has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Saratoga Investment and Trinity Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saratoga Investment	0	6	0	0	2.00
Trinity Capital	1	1	5	1	2.75

Saratoga Investment currently has a consensus price target of $23.63, indicating a potential upside of 7.23%. Trinity Capital has a consensus price target of $16.29, indicating a potential upside of 8.07%. Given Trinity Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Trinity Capital is more favorable than Saratoga Investment.

Insider & Institutional Ownership

19.1% of Saratoga Investment shares are owned by institutional investors. Comparatively, 24.6% of Trinity Capital shares are owned by institutional investors. 10.0% of Saratoga Investment shares are owned by insiders. Comparatively, 5.3% of Trinity Capital shares are owned by 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.

Profitability

This table compares Saratoga Investment and Trinity Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saratoga Investment	30.61%	9.19%	3.09%
Trinity Capital	46.18%	14.97%	6.68%

Summary

Trinity Capital beats Saratoga Investment on 14 of the 18 factors compared between the two stocks.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.

About Trinity Capital

Trinity Capital Inc. is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.