Head to Head Analysis: Amalgamated Financial (NASDAQ:AMAL) vs. Saratoga Investment (NYSE:SAR)

Saratoga Investment (NYSE:SAR) and Amalgamated Financial (NASDAQ:AMAL) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, dividends, profitability, valuation, institutional ownership and earnings.

Volatility and Risk

Saratoga Investment has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Amalgamated Financial has a beta of 0.79, indicating that its stock price is 21% less volatile than the S&P 500.

Dividends

Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 15.7%. Amalgamated Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.5%. Saratoga Investment pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Amalgamated Financial pays out 19.8% of its earnings in the form of a dividend. Amalgamated Financial has raised its dividend for 4 consecutive years.

Profitability

This table compares Saratoga Investment and Amalgamated Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saratoga Investment	12.70%	8.76%	2.95%
Amalgamated Financial	22.33%	13.89%	1.23%

Earnings & Valuation

This table compares Saratoga Investment and Amalgamated Financial”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saratoga Investment	$125.71 million	2.49	$36.60 million	$1.00	19.16
Amalgamated Financial	$453.17 million	3.07	$104.45 million	$3.44	13.53

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

Institutional & Insider Ownership

19.1% of Saratoga Investment shares are held by institutional investors. Comparatively, 75.9% of Amalgamated Financial shares are held by institutional investors. 10.0% of Saratoga Investment shares are held by insiders. Comparatively, 1.6% of Amalgamated Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Saratoga Investment and Amalgamated Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saratoga Investment	1	5	0	0	1.83
Amalgamated Financial	0	2	1	0	2.33

Saratoga Investment currently has a consensus target price of $21.50, suggesting a potential upside of 12.21%. Amalgamated Financial has a consensus target price of $48.00, suggesting a potential upside of 3.14%. Given Saratoga Investment’s higher probable upside, analysts clearly believe Saratoga Investment is more favorable than Amalgamated Financial.

Summary

Amalgamated Financial beats Saratoga Investment on 12 of the 17 factors compared between the two stocks.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.

About Amalgamated Financial

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services for commercial and retail customers in the United States. The company accepts various deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, and certificates of deposit. It also provides various commercial loans comprising commercial and industrial, multifamily mortgage, and commercial real estate loans; residential mortgage loans; and retail loans, such as residential real estate, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, and safe deposit box rental services; debit and ATM cards; and trust, custody, and investment management services comprising asset safekeeping, corporate actions, income collections, proxy, account transition, asset transfers, and conversion management services. Further, it provides investment products, such as funds spanning equity, fixed-income, real estate, and alternative investment products; and brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.