Financial Survey: Palmer Square Capital BDC (NYSE:PSBD) and Medallion Financial (NASDAQ:MFIN)

Medallion Financial (NASDAQ:MFIN) and Palmer Square Capital BDC (NYSE:PSBD) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, profitability, earnings, valuation, risk and dividends.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Medallion Financial and Palmer Square Capital BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medallion Financial	0	2	1	0	2.33
Palmer Square Capital BDC	0	4	0	0	2.00

Medallion Financial currently has a consensus target price of $12.00, indicating a potential upside of 10.91%. Palmer Square Capital BDC has a consensus target price of $13.00, indicating a potential upside of 8.68%. Given Medallion Financial’s stronger consensus rating and higher probable upside, research analysts plainly believe Medallion Financial is more favorable than Palmer Square Capital BDC.

Earnings & Valuation

This table compares Medallion Financial and Palmer Square Capital BDC”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medallion Financial	$229.57 million	1.10	$35.88 million	$1.71	6.33
Palmer Square Capital BDC	$143.51 million	2.62	$47.67 million	$0.43	27.82

Palmer Square Capital BDC has lower revenue, but higher earnings than Medallion Financial. Medallion Financial is trading at a lower price-to-earnings ratio than Palmer Square Capital BDC, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Medallion Financial has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Palmer Square Capital BDC has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Profitability

This table compares Medallion Financial and Palmer Square Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Medallion Financial	12.12%	9.28%	1.55%
Palmer Square Capital BDC	10.85%	10.77%	4.10%

Institutional and Insider Ownership

40.6% of Medallion Financial shares are held by institutional investors. Comparatively, 6.5% of Palmer Square Capital BDC shares are held by institutional investors. 24.6% of Medallion Financial shares are held by insiders. Comparatively, 1.1% of Palmer Square Capital BDC shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.4%. Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 12.0%. Medallion Financial pays out 28.1% of its earnings in the form of a dividend. Palmer Square Capital BDC pays out 334.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Medallion Financial beats Palmer Square Capital BDC on 9 of the 16 factors compared between the two stocks.

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.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.