WhiteHorse Finance (NASDAQ: WHF) and Triangle Capital Corporation (NYSE:TCAP) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, risk, profitability, institutional ownership, earnings, dividends and analyst recommendations.

Risk and Volatility

WhiteHorse Finance has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Triangle Capital Corporation has a beta of 0.9, indicating that its share price is 10% less volatile than the S&P 500.

Valuation and Earnings

This table compares WhiteHorse Finance and Triangle Capital Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WhiteHorse Finance N/A N/A N/A $1.88 7.44
Triangle Capital Corporation $120.01 million 5.57 $99.14 million $0.52 26.94

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

Insider and Institutional Ownership

11.1% of WhiteHorse Finance shares are held by institutional investors. Comparatively, 32.4% of Triangle Capital Corporation shares are held by institutional investors. 1.4% of WhiteHorse Finance shares are held by company insiders. Comparatively, 4.1% of Triangle Capital Corporation 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.

Dividends

WhiteHorse Finance pays an annual dividend of $1.42 per share and has a dividend yield of 10.2%. Triangle Capital Corporation pays an annual dividend of $1.80 per share and has a dividend yield of 12.8%. WhiteHorse Finance pays out 75.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Triangle Capital Corporation pays out 346.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for WhiteHorse Finance and Triangle Capital Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WhiteHorse Finance 0 0 2 0 3.00
Triangle Capital Corporation 0 4 4 0 2.50

WhiteHorse Finance currently has a consensus target price of $13.50, indicating a potential downside of 3.50%. Triangle Capital Corporation has a consensus target price of $18.75, indicating a potential upside of 33.83%. Given Triangle Capital Corporation’s higher possible upside, analysts plainly believe Triangle Capital Corporation is more favorable than WhiteHorse Finance.

Profitability

This table compares WhiteHorse Finance and Triangle Capital Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WhiteHorse Finance 62.57% 10.57% 5.99%
Triangle Capital Corporation 16.92% 10.51% 5.88%

WhiteHorse Finance Company Profile

WhiteHorse Finance, Inc. is a non-diversified, closed-end management investment company. The Company is a direct lender targeting debt investments in privately held, small-cap companies located in the United States. The Company’s investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing small-cap companies across a range of industries that typically carry a floating interest rate based on the London Interbank Offered Rate (LIBOR) and have a term of 3 to 6 years. The Company may also make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. The Company also may receive warrants to purchase common stock in connection with its debt investments. Its investment advisor is H.I.G. WhiteHorse Advisers, LLC.

Triangle Capital Corporation Company Profile

Triangle Capital Corporation is an internally managed, non-diversified closed-end management investment company. The Company is a specialty finance company that provides customized financing to lower middle market companies located primarily in the United States. The Company’s investment objective is to seek attractive returns by generating current income from its debt investments and capital appreciation from its equity-related investments. The Company invests primarily in subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The Company also invests in senior debt securities secured by first lien security interests in portfolio company assets. The Company’s portfolio includes its investments in various industry sectors, such as baby products; manufacturer and distributor for independent artists and authors; loan origination software solutions provider, and restaurant.

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