Altaba (NASDAQ: AABA) and Solar Senior Capital (NASDAQ:SUNS) are both financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Analyst Recommendations

This is a summary of current ratings and price targets for Altaba and Solar Senior Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Altaba 0 12 7 0 2.37
Solar Senior Capital 0 0 1 0 3.00

Altaba presently has a consensus target price of $51.69, indicating a potential downside of 27.46%. Solar Senior Capital has a consensus target price of $18.50, indicating a potential upside of 1.65%. Given Solar Senior Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Solar Senior Capital is more favorable than Altaba.

Valuation & Earnings

This table compares Altaba and Solar Senior Capital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Altaba $5.17 billion 12.04 -$214.32 million $1.87 38.10
Solar Senior Capital $27.20 million 10.73 $24.25 million $1.44 12.64

Solar Senior Capital has lower revenue, but higher earnings than Altaba. Solar Senior Capital is trading at a lower price-to-earnings ratio than Altaba, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

79.9% of Altaba shares are held by institutional investors. Comparatively, 30.2% of Solar Senior Capital shares are held by institutional investors. 24.0% of Altaba shares are held by insiders. Comparatively, 5.6% of Solar Senior Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Dividends

Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 7.7%. Altaba does not pay a dividend. Solar Senior Capital pays out 97.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Altaba and Solar Senior Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Altaba -0.29% 0.77% 0.50%
Solar Senior Capital 76.43% 8.39% 4.48%

Risk and Volatility

Altaba has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500. Comparatively, Solar Senior Capital has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.

Summary

Altaba beats Solar Senior Capital on 9 of the 16 factors compared between the two stocks.

Altaba Company Profile

Altaba Inc. (the Fund), formerly Yahoo! Inc., is a non-diversified, closed-end management investment company. The Fund seeks to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns. Alibaba Shares represent an approximate 15% equity interest in Alibaba Group Holding Limited (Alibaba), and its Yahoo Japan Corporation ((Yahoo Japa) Shares represent an approximate 36% equity interest in Yahoo Japan. In addition to the Alibaba Shares and the Yahoo Japan Shares, the Fund also owns the minority investments, all of the equity interests in Excalibur IP, LLC (which owns the Excalibur IP Assets) and the marketable debt securities portfolio. The Fund’s external investment advisors are BlackRock Advisors, LLC and Morgan Stanley Smith Barney LLC.

Solar Senior Capital Company Profile

Solar Senior Capital Ltd. is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to seek to maximize current income consistent with the preservation of capital. The Company seeks to achieve its investment objective by directly and indirectly investing in senior loans, including first lien, unitranche, and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which it refers to collectively as senior loans. It may also invest in debt of public companies that are thinly traded or in equity securities. Under normal market conditions, at least 80% of the value of its net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. It invests in privately held the United States middle-market companies. Its investment activities are managed by Solar Capital Partners, LLC (Solar Capital Partners or the Investment Advisor).

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