Analyzing Hamilton Lane (NASDAQ:HLNE) & Portman Ridge Finance (NASDAQ:BCIC)

Portman Ridge Finance (NASDAQ:BCIC) and Hamilton Lane (NASDAQ:HLNE) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, valuation, profitability, institutional ownership and earnings.

Dividends

Portman Ridge Finance pays an annual dividend of $1.08 per share and has a dividend yield of 15.1%. Hamilton Lane pays an annual dividend of $2.40 per share and has a dividend yield of 2.5%. Portman Ridge Finance pays out -196.4% of its earnings in the form of a dividend. Hamilton Lane pays out 36.6% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Hamilton Lane has increased its dividend for 8 consecutive years. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portman Ridge Finance	$61.15 million	1.44	$11.49 million	($0.55)	-12.96
Hamilton Lane	$758.99 million	7.02	$249.18 million	$6.56	14.63

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

Insider & Institutional Ownership

30.1% of Portman Ridge Finance shares are held by institutional investors. Comparatively, 97.4% of Hamilton Lane shares are held by institutional investors. 1.3% of Portman Ridge Finance shares are held by company insiders. Comparatively, 24.0% of Hamilton Lane shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings for Portman Ridge Finance and Hamilton Lane, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Portman Ridge Finance	1	4	0	0	1.80
Hamilton Lane	0	2	6	1	2.89

Portman Ridge Finance presently has a consensus target price of $9.25, indicating a potential upside of 29.73%. Hamilton Lane has a consensus target price of $131.57, indicating a potential upside of 37.08%. Given Hamilton Lane’s stronger consensus rating and higher probable upside, analysts plainly believe Hamilton Lane is more favorable than Portman Ridge Finance.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Portman Ridge Finance	-5.72%	14.09%	5.44%
Hamilton Lane	32.14%	25.10%	15.75%

Volatility and Risk

Portman Ridge Finance has a beta of 0.5, indicating that its stock price is 50% less volatile than the S&P 500. Comparatively, Hamilton Lane has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500.

Summary

Hamilton Lane beats Portman Ridge Finance on 16 of the 18 factors compared between the two stocks.

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, 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.

About Hamilton Lane

Hamilton Lane Incorporated is a private equity firm specializing in early venture, emerging growth, turnaround, middle market, mature, mid-venture, bridge, buyout, distressed/vulture, loan, mezzanine in growth capital companies. It prefers to invest in energy, industrials, consumer discretionary, health care, real estate, information technology, utilities, and consumer services. The firm prefers to invest in Africa/Middle East, Asia/Pacific, Europe, Latin America and Caribbean, United States of America, and Canada. The firm prefers to invest between $1 million and $100 million. It prefers to take majority stake. Hamilton Lane Incorporated was founded in 1991 and is based in Conshohocken, Pennsylvania with additional offices across Europe, North America, Asia Pacific and the Middle East.