Critical Review: Portman Ridge Finance (NASDAQ:PTMN) versus AllianceBernstein (NYSE:AB)

Portman Ridge Finance (NASDAQ:PTMN) and AllianceBernstein (NYSE:AB) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, earnings, dividends, profitability, risk, valuation and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Portman Ridge Finance and AllianceBernstein, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Portman Ridge Finance	0	0	0	0	0.00
AllianceBernstein	1	4	3	0	2.25

AllianceBernstein has a consensus price target of $39.92, suggesting a potential upside of 9.72%. Given AllianceBernstein’s stronger consensus rating and higher possible upside, analysts plainly believe AllianceBernstein is more favorable than Portman Ridge Finance.

Dividends

Portman Ridge Finance pays an annual dividend of $1.88 per share and has a dividend yield of 25.0%. AllianceBernstein pays an annual dividend of $3.32 per share and has a dividend yield of 9.1%. Portman Ridge Finance pays out -202.2% of its earnings in the form of a dividend. AllianceBernstein pays out 102.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

30.1% of Portman Ridge Finance shares are held by institutional investors. Comparatively, 19.3% of AllianceBernstein shares are held by institutional investors. 2.1% of Portman Ridge Finance shares are held by insiders. Comparatively, 2.7% of AllianceBernstein shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Portman Ridge Finance and AllianceBernstein”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portman Ridge Finance	-$2.85 million	-34.82	-$5.93 million	($0.93)	-8.08
AllianceBernstein	$4.53 billion	0.75	$299.84 million	$3.25	11.19

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

Profitability

This table compares Portman Ridge Finance and AllianceBernstein’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Portman Ridge Finance	-15.92%	11.49%	4.54%
AllianceBernstein	6.69%	23.11%	23.10%

Volatility and Risk

Portman Ridge Finance has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, AllianceBernstein has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500.

Summary

AllianceBernstein beats Portman Ridge Finance on 13 of the 16 factors compared between the two stocks.

About Portman Ridge Finance

Portman Ridge Finance Corporation is a business development company specializing in investments in unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment, mezzanine, buyout in middle market companies. It also makes acquisitions in businesses complementary to the firm's business. It primarily invests in healthcare, cargo transport, manufacturing, industrial & environmental services, logistics & distribution, media & telecommunications, real estate, education, automotive, agriculture, aerospace/defense, packaging, electronics, finance, non-durable consumer, consumer products, business services, utilities, insurance, and food and beverage sectors. The fund typically invests $1 million to $20 million in its portfolio companies. It provides senior secured term loans from $2 million to $20 million maturing in five to seven years; second lien term loans from $5 million to $15 million maturing in six to eight years; senior unsecured loans $5 million to $23 million maturing in six to eight years; mezzanine loans from $5 million to $15 million maturing in seven to ten years; and equity investments from $1 to $5 million. The fund targets the companies with EBITDA between $5 million and $25 million. While investing in debt securities, it invests in those middle market firms with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million. It invests in minority, and majority or control equity positions alongside its private equity sponsor partners.

About AllianceBernstein

AllianceBernstein Holding L.P. is a publicly owned investment manager. The firm is a related adviser The firm manages separate client focused portfolios for its clients. The firm primarily invests in common and preferred stocks, warrants and convertible securities, government and corporate fxed-income securities, commodities, currencies, real estate-related assets and infation-protected securities. The firm employs quantitative analysis along with long-term purchases, short-term purchases, trading, short sales, margin transactions, option strategies including writing covered options, uncovered options and spread strategies to make its investments. The firm obtains external research to complement its in-house research. The firm was formerly known as Alliance Capital Management Holding LP. AllianceBernstein Holding L.P. was founded in 1967 and is based in Nashville,Tennessee.