Comparing Horizon Technology Finance (HRZN) & Great Elm Capital (GECC)
Horizon Technology Finance (NASDAQ: HRZN) and Great Elm Capital (NASDAQ:GECC) are both small-cap financials companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, analyst recommendations, valuation, institutional ownership, dividends, risk and profitability.
Valuation and Earnings
This table compares Horizon Technology Finance and Great Elm Capital’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Horizon Technology Finance||$25.78 million||4.74||$9.59 million||$0.83||12.78|
|Great Elm Capital||$5.83 million||17.83||-$17.87 million||($0.24)||-40.58|
Horizon Technology Finance pays an annual dividend of $1.20 per share and has a dividend yield of 11.3%. Great Elm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 10.3%. Horizon Technology Finance pays out 144.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Great Elm Capital pays out -416.7% of its earnings in the form of a dividend.
Institutional and Insider Ownership
17.4% of Horizon Technology Finance shares are held by institutional investors. Comparatively, 8.1% of Great Elm Capital shares are held by institutional investors. 1.3% of Horizon Technology Finance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
This is a breakdown of current ratings and recommmendations for Horizon Technology Finance and Great Elm Capital, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Horizon Technology Finance||1||4||1||0||2.00|
|Great Elm Capital||0||1||2||0||2.67|
Horizon Technology Finance presently has a consensus price target of $11.00, suggesting a potential upside of 3.68%. Great Elm Capital has a consensus price target of $13.33, suggesting a potential upside of 36.89%. Given Great Elm Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Great Elm Capital is more favorable than Horizon Technology Finance.
This table compares Horizon Technology Finance and Great Elm Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Horizon Technology Finance||37.21%||8.99%||5.68%|
|Great Elm Capital||N/A||N/A||N/A|
Horizon Technology Finance beats Great Elm Capital on 10 of the 15 factors compared between the two stocks.
Horizon Technology Finance 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.
Great Elm Capital Company Profile
Great Elm Capital Corp. is a closed-end, non-diversified management investment company. The Company is focused on generating interest and capital appreciation by investing in the capital structures of middle-market companies that operate in a range of industries. The Company also focuses on making multi-year investments, primarily in secured and senior unsecured debt instruments that it purchases in the secondary markets, though it may also originate investments or acquire them directly from issuers. The Company’s investment advisor is Great Elm Capital Management, Inc. (GECM). Great Elm Capital Group is the parent company of GECM.
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