PennantPark Investment (NASDAQ:PNNT) & Elme Communities (NYSE:ELME) Head-To-Head Analysis

Elme Communities (NYSE:ELME) and PennantPark Investment (NASDAQ:PNNT) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, earnings, valuation, institutional ownership, risk, profitability and analyst recommendations.

Profitability

This table compares Elme Communities and PennantPark Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Elme Communities	N/A	N/A	N/A
PennantPark Investment	11.33%	11.59%	4.23%

Institutional & Insider Ownership

87.9% of Elme Communities shares are held by institutional investors. Comparatively, 26.6% of PennantPark Investment shares are held by institutional investors. 1.4% of Elme Communities shares are held by company insiders. Comparatively, 3.0% of PennantPark Investment shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Elme Communities and PennantPark Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Elme Communities	$206.36 million	0.76	-$154.16 million	($1.52)	-1.15
PennantPark Investment	$21.50 million	9.67	$48.85 million	$0.16	19.91

PennantPark Investment has lower revenue, but higher earnings than Elme Communities. Elme Communities is trading at a lower price-to-earnings ratio than PennantPark Investment, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Elme Communities and PennantPark Investment, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Elme Communities	1	2	0	0	1.67
PennantPark Investment	1	3	1	0	2.00

Elme Communities presently has a consensus price target of $18.00, suggesting a potential upside of 925.64%. PennantPark Investment has a consensus price target of $5.10, suggesting a potential upside of 60.13%. Given Elme Communities’ higher possible upside, equities research analysts clearly believe Elme Communities is more favorable than PennantPark Investment.

Volatility & Risk

Elme Communities has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500. Comparatively, PennantPark Investment has a beta of 0.65, meaning that its stock price is 35% less volatile than the S&P 500.

Summary

PennantPark Investment beats Elme Communities on 10 of the 14 factors compared between the two stocks.

About Elme Communities

Elme Communities is committed to elevating what home can be for middle-income renters by providing a higher level of quality, service, and experience. The Company is a multifamily real estate investment trust that owns and operates approximately 9,400 apartment homes in the Washington, DC metro and the Atlanta metro regions, and owns approximately 300,000 square feet of commercial space. Focused on providing quality, affordable homes to a deep, solid, and underserved base of mid-market demand, Elme Communities is building long-term value for shareholders.

About PennantPark Investment

PennantPark Investment Corporation, a business development company is a private equity fund specializes in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The fund typically invests in buildings and real estate, hotels, gaming and leisure, technology, telecommunications, transportation, information technology services, electronics, healthcare & pharmaceuticals, education and childcare, financial services, printing and publishing, consumer products, business services, energy & Related Services and utilities, distribution, oil and gas, media, environmental services, aerospace and defense, building materials, capital equipment, chemicals, plastics, & rubber, food & beverage, wholesale, manufacturing and basic industries and retail. It invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, senior secured debt, subordinated debt, subordinated loans, first lien debt, mezzanine loans, and distressed debt securities and private equity co-investments. It seeks to invest in companies based in the United States. The fund seeks to invest between $10 million and $100 million cross the capital structure (senior secured loans, subordinated debt, and other investments) in its portfolio companies with EBITDA between $10 to $50 million. Its mezzanine loans, senior secured loans, and other investments in its portfolio companies are between $15 million and $50 million. The fund may also make non-control equity and debt investments.