StoneCastle Financial Corp (NASDAQ: BANX) and American Capital Senior Floating (NASDAQ:ACSF) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.

Dividends

StoneCastle Financial Corp pays an annual dividend of $1.48 per share and has a dividend yield of 7.3%. American Capital Senior Floating pays an annual dividend of $1.16 per share and has a dividend yield of 9.8%. StoneCastle Financial Corp pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. American Capital Senior Floating pays out 37.3% of its earnings in the form of a dividend. American Capital Senior Floating is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of current recommendations and price targets for StoneCastle Financial Corp and American Capital Senior Floating, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
StoneCastle Financial Corp 0 0 3 0 3.00
American Capital Senior Floating 0 0 0 0 N/A

StoneCastle Financial Corp currently has a consensus price target of $22.17, indicating a potential upside of 9.20%. Given StoneCastle Financial Corp’s higher probable upside, equities analysts clearly believe StoneCastle Financial Corp is more favorable than American Capital Senior Floating.

Earnings and Valuation

This table compares StoneCastle Financial Corp and American Capital Senior Floating’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
StoneCastle Financial Corp N/A N/A N/A $1.74 11.67
American Capital Senior Floating N/A N/A N/A $3.11 3.81

American Capital Senior Floating is trading at a lower price-to-earnings ratio than StoneCastle Financial Corp, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares StoneCastle Financial Corp and American Capital Senior Floating’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
StoneCastle Financial Corp 66.25% N/A N/A
American Capital Senior Floating 119.98% 6.97% 3.69%

Risk and Volatility

StoneCastle Financial Corp has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, American Capital Senior Floating has a beta of 1.3, indicating that its share price is 30% more volatile than the S&P 500.

Insider and Institutional Ownership

34.9% of StoneCastle Financial Corp shares are held by institutional investors. Comparatively, 35.5% of American Capital Senior Floating shares are held by institutional investors. 8.0% of StoneCastle Financial Corp shares are held by company insiders. Comparatively, 0.2% of American Capital Senior Floating shares are held 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

American Capital Senior Floating beats StoneCastle Financial Corp on 8 of the 11 factors compared between the two stocks.

About StoneCastle Financial Corp

StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.

About American Capital Senior Floating

American Capital Senior Floating, Ltd. is a non-diversified closed-end investment management company. The Company’s investment objective is to provide attractive, risk-adjusted returns over the long term primarily through current income while seeking to preserve its capital. It manages a leveraged portfolio composed primarily of diversified investments in first lien and second lien floating rate loans principally to the United States-based companies (collectively, Senior Floating Rate Loans or SFRLs), which are referred to as leveraged loans. It invests in equity tranches of collateralized loan obligations (CLOs), which are securitized vehicles collateralized primarily by SFRLs, and it may invest in debt tranches of CLOs. In addition, it may selectively invest in loans issued by middle market companies, mezzanine and unitranche loans and high yield bonds. It has over 80% of its assets in Senior Floating Rate Loans. The Company is managed by American Capital ACSF Management, LLC.

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