Eaton Vance Tax Managed Buy Write Opport (NYSE: ETV) and FS Investment (NYSE:FSIC) are both small-cap financials companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, analyst recommendations, earnings, dividends, valuation and profitability.

Earnings and Valuation

This table compares Eaton Vance Tax Managed Buy Write Opport and FS Investment’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Eaton Vance Tax Managed Buy Write Opport N/A N/A N/A N/A N/A
FS Investment $422.81 million 4.45 $294.29 million $0.89 8.60

FS Investment has higher revenue and earnings than Eaton Vance Tax Managed Buy Write Opport.

Profitability

This table compares Eaton Vance Tax Managed Buy Write Opport and FS Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eaton Vance Tax Managed Buy Write Opport N/A N/A N/A
FS Investment 52.49% 8.97% 4.96%

Dividends

FS Investment pays an annual dividend of $0.76 per share and has a dividend yield of 9.9%. Eaton Vance Tax Managed Buy Write Opport does not pay a dividend. FS Investment pays out 85.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FS Investment has raised its dividend for 2 consecutive years.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Eaton Vance Tax Managed Buy Write Opport and FS Investment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eaton Vance Tax Managed Buy Write Opport 0 0 0 0 N/A
FS Investment 0 3 1 0 2.25

FS Investment has a consensus price target of $9.67, suggesting a potential upside of 26.36%. Given FS Investment’s higher probable upside, analysts clearly believe FS Investment is more favorable than Eaton Vance Tax Managed Buy Write Opport.

Volatility and Risk

Eaton Vance Tax Managed Buy Write Opport has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500. Comparatively, FS Investment has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500.

Institutional and Insider Ownership

32.4% of FS Investment shares are owned by institutional investors. 1.0% of FS Investment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

FS Investment beats Eaton Vance Tax Managed Buy Write Opport on 11 of the 12 factors compared between the two stocks.

About Eaton Vance Tax Managed Buy Write Opport

Eaton Vance Tax-Managed Buy-Write Opportunities Fund is a United States-based diversified, closed-end management investment company. The Fund’s investment objective is to provide income and gains, with a secondary objective of capital appreciation. It invests in a portfolio of common stocks and writes call options on one or more United States indices on a substantial portion of the value of its common stock portfolio to generate earnings from the option. It evaluates returns on an after tax basis and seeks to minimize and defer federal income taxes incurred by shareholders in connection with their investment in the Fund. Its portfolio of investments include hotels, restaurants and leisure; life sciences tools and services; software; technology hardware, storage and peripherals; technology hardware, storage and peripherals, and personal products, among others. Its investment advisor is Eaton Vance Management and its sub-advisor is Parametric Portfolio Associates LLC.

About FS Investment

FS Investment Corporation is an externally managed, non-diversified, closed-end management investment company. The Company’s investment objectives are to generate current income and long-term capital appreciation. Its portfolio consists primarily of investments in senior secured loans and second lien secured loans of the private United States middle market companies and subordinated loans of the private United States companies. It may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the over-the-counter market or directly from target companies as primary market or directly originated investments. It invests in a range of industries, including capital goods; consumer services; consumer durables and apparel; materials; commercial and professional services, and diversified financials. Its investment advisor is FB Income Advisor, LLC.

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