ArrowMark Financial (NASDAQ:BANX) & Portman Ridge Finance (NASDAQ:PTMN) Head to Head Comparison

ArrowMark Financial (NASDAQ:BANX) and Portman Ridge Finance (NASDAQ:PTMN) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, risk, valuation, earnings, profitability and institutional ownership.

Volatility and Risk

ArrowMark Financial has a beta of 0.22, indicating that its stock price is 78% less volatile than the S&P 500. Comparatively, Portman Ridge Finance has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500.

Dividends

ArrowMark Financial pays an annual dividend of $1.80 per share and has a dividend yield of 8.5%. Portman Ridge Finance pays an annual dividend of $1.88 per share and has a dividend yield of 16.3%. ArrowMark Financial pays out 391.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Portman Ridge Finance pays out -202.2% of its earnings in the form of a dividend. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current ratings for ArrowMark Financial and Portman Ridge Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
ArrowMark Financial	0	0	0	0	0.00
Portman Ridge Finance	0	1	0	0	2.00

Portman Ridge Finance has a consensus target price of $14.00, indicating a potential upside of 21.11%. Given Portman Ridge Finance’s stronger consensus rating and higher possible upside, analysts plainly believe Portman Ridge Finance is more favorable than ArrowMark Financial.

Profitability

This table compares ArrowMark Financial and Portman Ridge Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
ArrowMark Financial	N/A	N/A	N/A
Portman Ridge Finance	-15.92%	11.49%	4.54%

Insider and Institutional Ownership

24.9% of ArrowMark Financial shares are held by institutional investors. Comparatively, 30.1% of Portman Ridge Finance shares are held by institutional investors. 0.7% of ArrowMark Financial shares are held by insiders. Comparatively, 2.1% of Portman Ridge Finance shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings & Valuation

This table compares ArrowMark Financial and Portman Ridge Finance”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
ArrowMark Financial	N/A	N/A	N/A	$0.46	46.13
Portman Ridge Finance	-$2.85 million	-53.60	-$5.93 million	($0.93)	-12.43

ArrowMark Financial has higher revenue and earnings than Portman Ridge Finance. Portman Ridge Finance is trading at a lower price-to-earnings ratio than ArrowMark Financial, indicating that it is currently the more affordable of the two stocks.

Summary

Portman Ridge Finance beats ArrowMark Financial on 9 of the 13 factors compared between the two stocks.

About ArrowMark Financial

ArrowMark Financial Corp. is a closed-end balanced mutual fund launched and managed by ArrowMark Asset Management, LLC. It invests in public equity and fixed income markets of global region. For its equity portion, the fund invests in stocks of companies operating across financials, banks sectors. It invests in growth and value stocks of companies across diversified market capitalization. For its fixed income portion, the fund invests in debt and subordinated debt, structured notes and securities, regulatory capital securities which are rated below investment grade. ArrowMark Financial Corp. was formed on February 7, 2013 and is domiciled in the United States.

About Portman Ridge Finance

Portman Ridge Finance Corporation is a business development company specializing in investments in unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment, mezzanine, buyout in middle market companies. It also makes acquisitions in businesses complementary to the firm's business. It primarily invests in healthcare, cargo transport, manufacturing, industrial & environmental services, logistics & distribution, media & telecommunications, real estate, education, automotive, agriculture, aerospace/defense, packaging, electronics, finance, non-durable consumer, consumer products, business services, utilities, insurance, and food and beverage sectors. The fund typically invests $1 million to $20 million in its portfolio companies. It provides senior secured term loans from $2 million to $20 million maturing in five to seven years; second lien term loans from $5 million to $15 million maturing in six to eight years; senior unsecured loans $5 million to $23 million maturing in six to eight years; mezzanine loans from $5 million to $15 million maturing in seven to ten years; and equity investments from $1 to $5 million. The fund targets the companies with EBITDA between $5 million and $25 million. While investing in debt securities, it invests in those middle market firms with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million. It invests in minority, and majority or control equity positions alongside its private equity sponsor partners.