Head-To-Head Contrast: PennantPark Investment (NASDAQ:PNNT) versus Virtu Financial (NYSE:VIRT)

Virtu Financial (NYSE:VIRT) and PennantPark Investment (NASDAQ:PNNT) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Institutional and Insider Ownership

45.8% of Virtu Financial shares are held by institutional investors. Comparatively, 26.6% of PennantPark Investment shares are held by institutional investors. 46.8% of Virtu Financial shares are held by company insiders. Comparatively, 3.0% of PennantPark Investment shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Volatility and Risk

Virtu Financial has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500. Comparatively, PennantPark Investment has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Profitability

This table compares Virtu Financial and PennantPark Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Virtu Financial	13.50%	49.06%	4.28%
PennantPark Investment	11.33%	11.59%	4.23%

Dividends

Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 1.8%. PennantPark Investment pays an annual dividend of $0.48 per share and has a dividend yield of 15.9%. Virtu Financial pays out 15.9% of its earnings in the form of a dividend. PennantPark Investment pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennantPark Investment has increased its dividend for 1 consecutive years. PennantPark Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings & Valuation

This table compares Virtu Financial and PennantPark Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Virtu Financial	$3.63 billion	2.30	$468.36 million	$6.02	8.93
PennantPark Investment	$21.50 million	9.18	$48.85 million	$0.16	18.91

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

Analyst Recommendations

This is a summary of recent recommendations and price targets for Virtu Financial and PennantPark Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Virtu Financial	1	2	4	0	2.43
PennantPark Investment	1	3	1	0	2.00

Virtu Financial currently has a consensus target price of $68.25, indicating a potential upside of 26.93%. PennantPark Investment has a consensus target price of $5.10, indicating a potential upside of 68.60%. Given PennantPark Investment’s higher probable upside, analysts plainly believe PennantPark Investment is more favorable than Virtu Financial.

Summary

Virtu Financial beats PennantPark Investment on 11 of the 16 factors compared between the two stocks.

About Virtu Financial

Virtu Financial, Inc., a financial services company, provides data, analytics, and connectivity products to clients worldwide. The company operates in two segments, Market Making and Execution Services. Its product suite includes offerings in execution, liquidity sourcing, analytics and broker-neutral, and multi-dealer platforms in workflow technology. The company’s solutions enable clients to trade on various venues across countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income, cryptocurrencies, and other commodities. Its analytics platform provides a range of pre- and post-trade services, data products, and compliance tools for clients to invest, trade, and manage risk across markets. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.

About PennantPark Investment

PennantPark Investment Corporation, a business development company is a private equity fund specializes in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The fund typically invests in buildings and real estate, hotels, gaming and leisure, technology, telecommunications, transportation, information technology services, electronics, healthcare & pharmaceuticals, education and childcare, financial services, printing and publishing, consumer products, business services, energy & Related Services and utilities, distribution, oil and gas, media, environmental services, aerospace and defense, building materials, capital equipment, chemicals, plastics, & rubber, food & beverage, wholesale, manufacturing and basic industries and retail. It invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, senior secured debt, subordinated debt, subordinated loans, first lien debt, mezzanine loans, and distressed debt securities and private equity co-investments. It seeks to invest in companies based in the United States. The fund seeks to invest between $10 million and $100 million cross the capital structure (senior secured loans, subordinated debt, and other investments) in its portfolio companies with EBITDA between $10 to $50 million. Its mezzanine loans, senior secured loans, and other investments in its portfolio companies are between $15 million and $50 million. The fund may also make non-control equity and debt investments.