WhiteHorse Finance (NASDAQ: WHF) and Oxford Lane Capital (NASDAQ:OXLC) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, earnings, dividends, risk, institutional ownership, profitability and valuation.

Dividends

WhiteHorse Finance pays an annual dividend of $1.42 per share and has a dividend yield of 10.4%. Oxford Lane Capital pays an annual dividend of $1.60 per share and has a dividend yield of 16.3%. WhiteHorse Finance pays out 76.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Oxford Lane Capital pays out 116.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional & Insider Ownership

9.2% of WhiteHorse Finance shares are held by institutional investors. 1.4% of WhiteHorse Finance shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

WhiteHorse Finance has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500. Comparatively, Oxford Lane Capital has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and price targets for WhiteHorse Finance and Oxford Lane Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WhiteHorse Finance 0 2 1 0 2.33
Oxford Lane Capital 0 0 1 0 3.00

WhiteHorse Finance presently has a consensus target price of $15.00, indicating a potential upside of 9.81%. Oxford Lane Capital has a consensus target price of $11.00, indicating a potential upside of 12.02%. Given Oxford Lane Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Oxford Lane Capital is more favorable than WhiteHorse Finance.

Profitability

This table compares WhiteHorse Finance and Oxford Lane Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WhiteHorse Finance 64.58% 9.69% 5.54%
Oxford Lane Capital 18.15% 5.38% 3.27%

Earnings & Valuation

This table compares WhiteHorse Finance and Oxford Lane Capital’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
WhiteHorse Finance $53.85 million 5.21 $31.32 million $1.86 7.34
Oxford Lane Capital N/A N/A N/A $1.37 7.17

WhiteHorse Finance has higher revenue and earnings than Oxford Lane Capital. Oxford Lane Capital is trading at a lower price-to-earnings ratio than WhiteHorse Finance, indicating that it is currently the more affordable of the two stocks.

Summary

WhiteHorse Finance beats Oxford Lane Capital on 9 of the 13 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is a non-diversified, closed-end management investment company. The Company is a direct lender targeting debt investments in privately held, small-cap companies located in the United States. The Company’s investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing small-cap companies across a range of industries that typically carry a floating interest rate based on the London Interbank Offered Rate (LIBOR) and have a term of 3 to 6 years. The Company may also make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. The Company also may receive warrants to purchase common stock in connection with its debt investments. Its investment advisor is H.I.G. WhiteHorse Advisers, LLC.

About Oxford Lane Capital

Oxford Lane Capital Corp. is a non-diversified closed-end management investment company. The Fund’s investment objective is to maximize its portfolio’s risk adjusted total return and seeks to achieve its investment objective by investing in structured finance investments, specifically collateralized loan obligation (CLO) vehicles, which primarily own senior corporate debt securities. The Fund holds debt investments in over three different CLO structures and equity investments in approximately 30 different CLO structures. Its investment strategy also includes investing in warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. The Fund may also invest, on an opportunistic basis, in corporate debt securities on a direct basis and a range of other corporate credits. Oxford Lane Management, LLC (OXLC Management) is the investment advisor of the Fund.

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