Critical Contrast: Fidus Investment (NASDAQ:FDUS) and PhenixFIN (NYSE:PFX)

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

Valuation & Earnings

This table compares Fidus Investment and PhenixFIN”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Fidus Investment	$155.87 million	4.66	$82.40 million	$2.09	9.16
PhenixFIN	$14.16 million	6.23	$18.62 million	$2.41	18.95

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

Analyst Recommendations

This is a breakdown of current ratings and price targets for Fidus Investment and PhenixFIN, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Fidus Investment	0	2	0	0	2.00
PhenixFIN	0	0	0	1	4.00

Fidus Investment presently has a consensus price target of $19.50, suggesting a potential upside of 1.83%. Given Fidus Investment’s higher probable upside, analysts plainly believe Fidus Investment is more favorable than PhenixFIN.

Institutional and Insider Ownership

28.1% of Fidus Investment shares are owned by institutional investors. Comparatively, 43.3% of PhenixFIN shares are owned by institutional investors. 0.9% of Fidus Investment shares are owned by company insiders. Comparatively, 25.2% of PhenixFIN shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Fidus Investment has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500. Comparatively, PhenixFIN has a beta of 0.28, suggesting that its stock price is 72% less volatile than the S&P 500.

Profitability

This table compares Fidus Investment and PhenixFIN’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Fidus Investment	45.36%	10.87%	5.64%
PhenixFIN	72.98%	2.95%	1.68%

Dividends

Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 9.0%. PhenixFIN pays an annual dividend of $0.48 per share and has a dividend yield of 1.1%. Fidus Investment pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PhenixFIN pays out 19.9% of its earnings in the form of a dividend.

About Fidus Investment

Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.

About PhenixFIN

PhenixFIN Corporation is a business development company. The firm seeks to invest in privately negotiated debt and equity securities of small and middle market companies. It primarily invests in the following sectors: business services; buildings and real estate; automobile; oil and gas; aerospace and defense; home and office furnishings, housewares, and durable consumer products; healthcare, education and childcare; personal, food, and miscellaneous services; retail stores, diversified or conglomerate manufacturing; telecommunications; mining, steel, iron, and non-precious metals; leisure, amusement, motion pictures, and entertainment; chemicals, plastics, and rubber; finance; personal and nondurable consumer products (manufacturing only); beverage, food, and tobacco; containers, packaging, and glass; structure finance securities; machinery (non-agriculture, non-construction, non-electric); diversified or conglomerate service; restaurant and franchise; electronics; and cargo transport. The fund seeks to invest in companies located in North America. The fund targets private debt transactions in companies with enterprise values or asset values between $25 million and $250 million. The fund seeks to invest in companies with debt investment values between $10 million and $50 million. It exits its investments between three years and seven years; it holds most of its investments to maturity or repayment, but may realize or sell some investments earlier. The fund may take a board seat on its investee companies and can also offer managerial assistance to certain portfolio companies. It structures its investments as first lien senior secured loans, second lien senior secured loans, senior secured notes, senior subordinated notes, subordinate notes, unitranche loans, and seeks warrants or other equity participation. The fund may co-invest in privately negotiated transactions under certain conditions. PhenixFIN Corporation was founded in 2010 and is headquartered in New York, New York.