Ampal American Israel (OTCMKTS:AMPLQ) and KCAP Financial (NASDAQ:KCAP) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, institutional ownership, profitability, analyst recommendations, valuation and dividends.

Profitability

This table compares Ampal American Israel and KCAP Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ampal American Israel N/A N/A N/A
KCAP Financial -35.34% 5.81% 3.52%

Institutional and Insider Ownership

27.6% of KCAP Financial shares are owned by institutional investors. 63.4% of Ampal American Israel shares are owned by insiders. Comparatively, 8.1% of KCAP Financial shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Ampal American Israel and KCAP Financial’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Ampal American Israel N/A N/A N/A N/A N/A
KCAP Financial $27.09 million 3.72 -$9.57 million $0.27 10.00

Ampal American Israel has higher earnings, but lower revenue than KCAP Financial.

Volatility and Risk

Ampal American Israel has a beta of -13.33, indicating that its share price is 1,433% less volatile than the S&P 500. Comparatively, KCAP Financial has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Dividends

KCAP Financial pays an annual dividend of $0.40 per share and has a dividend yield of 14.8%. Ampal American Israel does not pay a dividend. KCAP Financial pays out 148.1% 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 summary of current ratings and recommmendations for Ampal American Israel and KCAP Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ampal American Israel 0 0 0 0 N/A
KCAP Financial 0 1 0 0 2.00

KCAP Financial has a consensus price target of $3.00, indicating a potential upside of 11.11%. Given KCAP Financial’s higher possible upside, analysts plainly believe KCAP Financial is more favorable than Ampal American Israel.

Summary

KCAP Financial beats Ampal American Israel on 7 of the 10 factors compared between the two stocks.

Ampal American Israel Company Profile

Ampal-American Israel Corp. is engaged in acquiring interests of businesses in the state of israel of that are israel-related. The company investment principally focus on companies and ventures. It operates in five segments: chemical, energy, real estate rental, leisure-time and finance. The company was founded in 1942 and is headquartered in Herzliya, Israel.

KCAP Financial Company Profile

KCAP Financial, Inc. is a business development company specializing in investments in debt securities portfolio, asset manager affiliates, and CLO fund securities. The firm prefers to invest in senior secured term loans, mezzanine debt, and equity securities primarily in privately-held middle market, and buyout companies. It also invests in debt and subordinated securities issued by CLO Fund Securities. The firm also makes investments in CLO Fund Securities managed by asset managers. Its investments under CLO Fund Securities comprises of minority investment in the subordinated securities or preferred stock of CLO Funds raised and managed by firm's Asset Manager Affiliates. The firm also invests in other investments such as loans to larger, publicly-traded companies, high-yield bonds and distressed debt securities. It also invests in first and second lien term loans. The firm also prefers to invest in secured and unsecured subordinated debt. It also makes acquisitions in businesses complementary to the firm's business. It primarily invests in healthcare, cargo transport, manufacturing, real estate, educate, automotive, agriculture, aerospace/defence, packaging, electronics, finance, non-durable consumer, utilities, insurance, and food and beverage sectors. The firm 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 firm targets the companies with EBITDA between $7.5 million and $50 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. The firm invests through its own balance sheet. KCAP Financial, Inc. was founded in August 2006 and is based in New York, New York.

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