Triplepoint Venture Growth BDC (NYSE:TPVG) and PennantPark Investment (NASDAQ:PNNT) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Risk & Volatility

Triplepoint Venture Growth BDC has a beta of 1.23, suggesting that its share price is 23% more volatile than the S&P 500. Comparatively, PennantPark Investment has a beta of 1.19, suggesting that its share price is 19% more volatile than the S&P 500.

Institutional & Insider Ownership

38.3% of Triplepoint Venture Growth BDC shares are held by institutional investors. Comparatively, 42.6% of PennantPark Investment shares are held by institutional investors. 1.8% of Triplepoint Venture Growth BDC shares are held by company insiders. Comparatively, 2.0% of PennantPark Investment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Triplepoint Venture Growth BDC pays an annual dividend of $1.44 per share and has a dividend yield of 10.8%. PennantPark Investment pays an annual dividend of $0.72 per share and has a dividend yield of 9.5%. Triplepoint Venture Growth BDC pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PennantPark Investment pays out 91.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Triplepoint Venture Growth BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Triplepoint Venture Growth BDC and PennantPark Investment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Triplepoint Venture Growth BDC 0 2 2 0 2.50
PennantPark Investment 0 2 1 0 2.33

Triplepoint Venture Growth BDC presently has a consensus target price of $14.08, indicating a potential upside of 5.49%. PennantPark Investment has a consensus target price of $8.00, indicating a potential upside of 5.96%. Given PennantPark Investment’s higher probable upside, analysts plainly believe PennantPark Investment is more favorable than Triplepoint Venture Growth BDC.

Profitability

This table compares Triplepoint Venture Growth BDC and PennantPark Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Triplepoint Venture Growth BDC 47.08% 10.49% 4.90%
PennantPark Investment 39.31% 8.12% 4.45%

Earnings and Valuation

This table compares Triplepoint Venture Growth BDC and PennantPark Investment’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Triplepoint Venture Growth BDC $51.51 million 4.61 $19.22 million $1.61 8.29
PennantPark Investment $124.53 million 4.24 $61.71 million $0.79 9.56

PennantPark Investment has higher revenue and earnings than Triplepoint Venture Growth BDC. Triplepoint Venture Growth BDC is trading at a lower price-to-earnings ratio than PennantPark Investment, indicating that it is currently the more affordable of the two stocks.

Summary

Triplepoint Venture Growth BDC beats PennantPark Investment on 10 of the 16 factors compared between the two stocks.

About Triplepoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its total return to stockholders primarily in the form of current income and, to a lesser extent, capital appreciation by primarily lending with warrants to venture growth stage companies focused in technology, life sciences and other high growth industries, which are backed by TriplePoint Capital LLC’s (TPC) select group of venture capital investors. The Company targets investment opportunities in venture growth stage companies backed by venture capital investors. The Company originates and invests primarily in loans that have a secured collateral position and are used by venture growth stage companies to finance their continued expansion and growth, equipment financings and, on a select basis, revolving loans. The Company is managed by TPVG Advisers LLC.

About PennantPark Investment

PennantPark Investment Corporation is a closed-end, non-diversified investment company. The Company is a business development company. Its objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to the United States middle-market companies in the form of senior secured debt, mezzanine debt and equity investments. The Company’s debt investments may generally range in maturity from 3 to 10 years and, are made to the United States and to a limited extent, non-United States corporations, partnerships and other business entities, which operate in various industries and geographical regions. In addition, it may invest up to approximately 30% of its portfolio in non-qualifying assets. It invests in sectors, such as aerospace and defense; energy/utilities; auto sector; environmental services, and beverage, among others. PennantPark Investment Advisers, LLC is the Company’s investment advisor.

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