Critical Contrast: Horizon Technology Finance (NASDAQ:HRZN) vs. Barings Bdc (NYSE:BBDC)

Horizon Technology Finance (NASDAQ:HRZN) and Barings Bdc (NYSE:BBDC) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their earnings, valuation, analyst recommendations, profitability, dividends, institutional ownership and risk.

Valuation and Earnings

This table compares Horizon Technology Finance and Barings Bdc”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Horizon Technology Finance	$96.02 million	2.85	-$2.66 million	$0.43	9.33
Barings Bdc	$279.21 million	3.19	$101.92 million	$0.85	10.01

Barings Bdc has higher revenue and earnings than Horizon Technology Finance. Horizon Technology Finance is trading at a lower price-to-earnings ratio than Barings Bdc, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Horizon Technology Finance has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, Barings Bdc has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Horizon Technology Finance and Barings Bdc, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Technology Finance	1	5	1	0	2.00
Barings Bdc	0	3	1	0	2.25

Horizon Technology Finance presently has a consensus price target of $5.65, indicating a potential upside of 40.90%. Barings Bdc has a consensus price target of $9.50, indicating a potential upside of 11.69%. Given Horizon Technology Finance’s higher probable upside, equities research analysts plainly believe Horizon Technology Finance is more favorable than Barings Bdc.

Profitability

This table compares Horizon Technology Finance and Barings Bdc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Horizon Technology Finance	22.55%	13.63%	5.53%
Barings Bdc	32.45%	10.08%	4.33%

Dividends

Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 18.0%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 12.2%. Horizon Technology Finance pays out 167.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc pays out 122.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has raised its dividend for 3 consecutive years.

Institutional and Insider Ownership

4.9% of Horizon Technology Finance shares are owned by institutional investors. Comparatively, 44.1% of Barings Bdc shares are owned by institutional investors. 1.3% of Horizon Technology Finance shares are owned by insiders. Comparatively, 0.6% of Barings Bdc shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Summary

Barings Bdc beats Horizon Technology Finance on 10 of the 16 factors compared between the two stocks.

About Horizon Technology Finance

Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, cleantech and sustainability industries. It seeks to invest in companies in the United States.

About Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.