MCG Capital Corp (NASDAQ: MCGC) and Horizon Technology Finance Corporation (NASDAQ:HRZN) are both closed end funds companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Dividends

Horizon Technology Finance Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 10.9%. MCG Capital Corp does not pay a dividend. Horizon Technology Finance Corporation pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares MCG Capital Corp and Horizon Technology Finance Corporation’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
MCG Capital Corp N/A N/A N/A $0.11 N/A
Horizon Technology Finance Corporation $32.98 million 3.85 -$4.91 million $0.57 19.35

MCG Capital Corp has higher revenue, but lower earnings than Horizon Technology Finance Corporation. MCG Capital Corp is trading at a lower price-to-earnings ratio than Horizon Technology Finance Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

18.1% of Horizon Technology Finance Corporation shares are held by institutional investors. 1.3% of Horizon Technology Finance Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

This table compares MCG Capital Corp and Horizon Technology Finance Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MCG Capital Corp -9.19% -0.34% -0.33%
Horizon Technology Finance Corporation 24.46% 9.96% 6.31%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for MCG Capital Corp and Horizon Technology Finance Corporation, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MCG Capital Corp 0 0 0 0 N/A
Horizon Technology Finance Corporation 1 3 1 0 2.00

Horizon Technology Finance Corporation has a consensus target price of $10.75, indicating a potential downside of 2.54%.

Summary

Horizon Technology Finance Corporation beats MCG Capital Corp on 9 of the 10 factors compared between the two stocks.

MCG Capital Corp Company Profile

PFLT Funding II, LLC, formerly MCG Capital Corporation, is a United States-based company. The Company provides products and services.

Horizon Technology Finance Corporation Company Profile

Horizon Technology Finance Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to maximize investment portfolio’s total return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. It lends to and invests in development-stage companies in the technology, life science, healthcare information and services and cleantech industries (collectively Target Industries). It is focused on making secured debt investments (Venture Loans) to venture capital backed companies in its Target Industries. As of December 31, 2016, its debt investment portfolio consisted of 44 debt investments. As of December 31, 2016, the Company held warrants to purchase stock, predominantly preferred stock, in 78 portfolio companies, equity positions in five portfolio companies and success fee arrangements in 11 portfolio companies.

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