PennantPark Investment Corporation (NASDAQ: PNNT) and BlackRock Capital Investment Corporation (NASDAQ:BKCC) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, risk, profitability, dividends, earnings, valuation and institutional ownership.

Volatility & Risk

PennantPark Investment Corporation has a beta of 1.25, indicating that its share price is 25% more volatile than the S&P 500. Comparatively, BlackRock Capital Investment Corporation has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.

Insider & Institutional Ownership

42.7% of PennantPark Investment Corporation shares are held by institutional investors. Comparatively, 29.0% of BlackRock Capital Investment Corporation shares are held by institutional investors. 1.9% of PennantPark Investment Corporation shares are held by insiders. Comparatively, 1.3% of BlackRock Capital Investment Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

PennantPark Investment Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 9.5%. BlackRock Capital Investment Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 10.0%. PennantPark Investment Corporation pays out 74.2% of its earnings in the form of a dividend. BlackRock Capital Investment Corporation pays out -1,028.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. BlackRock Capital Investment Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares PennantPark Investment Corporation and BlackRock Capital Investment Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PennantPark Investment Corporation N/A N/A N/A $0.97 7.80
BlackRock Capital Investment Corporation N/A N/A N/A ($0.07) -103.00

BlackRock Capital Investment Corporation is trading at a lower price-to-earnings ratio than PennantPark Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and target prices for PennantPark Investment Corporation and BlackRock Capital Investment Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PennantPark Investment Corporation 0 7 2 0 2.22
BlackRock Capital Investment Corporation 0 1 0 0 2.00

PennantPark Investment Corporation presently has a consensus target price of $8.14, indicating a potential upside of 7.57%. BlackRock Capital Investment Corporation has a consensus target price of $8.00, indicating a potential upside of 10.96%. Given BlackRock Capital Investment Corporation’s higher possible upside, analysts plainly believe BlackRock Capital Investment Corporation is more favorable than PennantPark Investment Corporation.

Profitability

This table compares PennantPark Investment Corporation and BlackRock Capital Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PennantPark Investment Corporation 53.92% 9.11% 4.72%
BlackRock Capital Investment Corporation -5.04% 7.20% 4.51%

Summary

PennantPark Investment Corporation beats BlackRock Capital Investment Corporation on 9 of the 13 factors compared between the two stocks.

PennantPark Investment Corporation Company Profile

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.

BlackRock Capital Investment Corporation Company Profile

BlackRock Capital Investment Corporation is an externally-managed, non-diversified, closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation through its debt and equity investments. The Company provides middle-market companies with a range of financing solutions, including senior and junior secured, unsecured and subordinated debt securities and loans, and equity securities. Its targeted investment typically ranges between $10 million and $50 million. The Company generally seeks to invest in companies that operate in a range of industries. The Company’s investments are in senior and junior secured, unsecured and subordinated loans to the United States private and certain public middle-market companies. The Company’s investment advisor is BlackRock Advisors, LLC.

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