Contrasting WhiteHorse Finance (NASDAQ:WHF) and Medallion Financial (NASDAQ:MFIN)

WhiteHorse Finance (NASDAQ:WHF) and Medallion Financial (NASDAQ:MFIN) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Insider and Institutional Ownership

13.2% of WhiteHorse Finance shares are owned by institutional investors. Comparatively, 40.6% of Medallion Financial shares are owned by institutional investors. 2.5% of WhiteHorse Finance shares are owned by insiders. Comparatively, 24.6% of Medallion Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for WhiteHorse Finance and Medallion Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WhiteHorse Finance	2	3	0	0	1.60
Medallion Financial	1	2	1	0	2.00

WhiteHorse Finance presently has a consensus price target of $7.75, suggesting a potential upside of 17.07%. Medallion Financial has a consensus price target of $11.25, suggesting a potential upside of 16.46%. Given WhiteHorse Finance’s higher possible upside, equities analysts clearly believe WhiteHorse Finance is more favorable than Medallion Financial.

Dividends

WhiteHorse Finance pays an annual dividend of $1.00 per share and has a dividend yield of 15.1%. Medallion Financial pays an annual dividend of $0.56 per share and has a dividend yield of 5.8%. WhiteHorse Finance pays out 243.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medallion Financial pays out 37.8% of its earnings in the form of a dividend. WhiteHorse Finance has increased its dividend for 3 consecutive years. WhiteHorse Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

WhiteHorse Finance has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 0.78, indicating that its share price is 22% less volatile than the S&P 500.

Valuation & Earnings

This table compares WhiteHorse Finance and Medallion Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WhiteHorse Finance	$72.67 million	1.96	$14.34 million	$0.41	16.15
Medallion Financial	$353.31 million	0.63	$43.04 million	$1.48	6.53

Medallion Financial has higher revenue and earnings than WhiteHorse Finance. Medallion Financial is trading at a lower price-to-earnings ratio than WhiteHorse Finance, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares WhiteHorse Finance and Medallion Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WhiteHorse Finance	13.46%	9.47%	3.95%
Medallion Financial	10.35%	7.73%	1.35%

Summary

Medallion Financial beats WhiteHorse Finance on 9 of the 17 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.