Financial Contrast: Medallion Financial (NASDAQ:MFIN) and Horizon Technology Finance (NASDAQ:HRZN)

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

Institutional and Insider Ownership

40.6% of Medallion Financial shares are held by institutional investors. Comparatively, 4.9% of Horizon Technology Finance shares are held by institutional investors. 24.6% of Medallion Financial shares are held by insiders. Comparatively, 1.3% of Horizon Technology Finance shares are held by 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.

Risk and Volatility

Medallion Financial has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Horizon Technology Finance has a beta of 1.1, meaning that its share price is 10% more volatile than the S&P 500.

Earnings & Valuation

This table compares Medallion Financial and Horizon Technology Finance”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medallion Financial	$243.39 million	0.91	$43.04 million	$1.78	5.28
Horizon Technology Finance	$7.22 million	25.70	-$2.66 million	($0.16)	-24.25

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Medallion Financial	12.18%	9.38%	1.61%
Horizon Technology Finance	-2.77%	14.52%	5.76%

Dividends

Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 5.1%. Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 18.6%. Medallion Financial pays out 27.0% of its earnings in the form of a dividend. Horizon Technology Finance pays out -450.0% 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. Horizon Technology Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Medallion Financial and Horizon Technology Finance, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medallion Financial	0	2	1	0	2.33
Horizon Technology Finance	3	4	1	0	1.75

Medallion Financial presently has a consensus target price of $12.00, suggesting a potential upside of 27.66%. Horizon Technology Finance has a consensus target price of $6.17, suggesting a potential upside of 58.93%. Given Horizon Technology Finance’s higher probable upside, analysts clearly believe Horizon Technology Finance is more favorable than Medallion Financial.

Summary

Medallion Financial beats Horizon Technology Finance on 8 of the 15 factors compared between the two stocks.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.

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.