Contrasting WhiteHorse Finance (NASDAQ:WHF) and Palmer Square Capital BDC (NYSE:PSBD)

WhiteHorse Finance (NASDAQ:WHF) and Palmer Square Capital BDC (NYSE:PSBD) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, profitability, risk, earnings, institutional ownership, analyst recommendations and dividends.

Dividends

WhiteHorse Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.5%. Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 12.0%. WhiteHorse Finance pays out 232.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Palmer Square Capital BDC pays out 334.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WhiteHorse Finance has raised its dividend for 3 consecutive years. WhiteHorse Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider and Institutional Ownership

13.2% of WhiteHorse Finance shares are owned by institutional investors. Comparatively, 6.5% of Palmer Square Capital BDC shares are owned by institutional investors. 2.5% of WhiteHorse Finance shares are owned by company insiders. Comparatively, 1.1% of Palmer Square Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares WhiteHorse Finance and Palmer Square Capital BDC”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WhiteHorse Finance	$15.86 million	10.14	$10.85 million	$0.43	16.09
Palmer Square Capital BDC	$143.51 million	2.64	$47.67 million	$0.43	27.94

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

Analyst Recommendations

This is a summary of recent ratings and target prices for WhiteHorse Finance and Palmer Square Capital BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WhiteHorse Finance	2	3	0	0	1.60
Palmer Square Capital BDC	0	4	0	0	2.00

WhiteHorse Finance presently has a consensus price target of $7.75, indicating a potential upside of 11.99%. Palmer Square Capital BDC has a consensus price target of $13.00, indicating a potential upside of 8.20%. Given WhiteHorse Finance’s higher possible upside, analysts clearly believe WhiteHorse Finance is more favorable than Palmer Square Capital BDC.

Profitability

This table compares WhiteHorse Finance and Palmer Square Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WhiteHorse Finance	12.91%	9.93%	4.14%
Palmer Square Capital BDC	10.85%	10.77%	4.10%

Volatility and Risk

WhiteHorse Finance has a beta of 0.56, meaning that its stock price is 44% less volatile than the S&P 500. Comparatively, Palmer Square Capital BDC has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500.

Summary

WhiteHorse Finance beats Palmer Square Capital BDC on 9 of the 15 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.