Analyzing Westwood Holdings Group (NYSE:WHG) & Portman Ridge Finance (NASDAQ:PTMN)

Portman Ridge Finance (NASDAQ:PTMN) and Westwood Holdings Group (NYSE:WHG) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, profitability, valuation, risk, earnings, institutional ownership and dividends.

Profitability

This table compares Portman Ridge Finance and Westwood Holdings Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Portman Ridge Finance	-15.92%	11.49%	4.54%
Westwood Holdings Group	7.40%	8.34%	6.82%

Analyst Ratings

This is a breakdown of recent ratings and price targets for Portman Ridge Finance and Westwood Holdings Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Portman Ridge Finance	0	0	0	0	0.00
Westwood Holdings Group	0	0	1	0	3.00

Risk & Volatility

Portman Ridge Finance has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Westwood Holdings Group has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500.

Insider & Institutional Ownership

30.1% of Portman Ridge Finance shares are owned by institutional investors. Comparatively, 56.6% of Westwood Holdings Group shares are owned by institutional investors. 2.1% of Portman Ridge Finance shares are owned by insiders. Comparatively, 17.4% of Westwood Holdings Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Portman Ridge Finance pays an annual dividend of $1.88 per share and has a dividend yield of 25.4%. Westwood Holdings Group pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Portman Ridge Finance pays out -202.2% of its earnings in the form of a dividend. Westwood Holdings Group pays out 72.3% 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. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Portman Ridge Finance and Westwood Holdings Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portman Ridge Finance	-$2.85 million	-34.31	-$5.93 million	($0.93)	-7.96
Westwood Holdings Group	$97.76 million	1.67	$7.06 million	$0.83	20.70

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

Summary

Westwood Holdings Group beats Portman Ridge Finance on 12 of the 15 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, mezzanine, 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 Westwood Holdings Group

Westwood Holdings Group, Inc., through its subsidiaries, manages investment assets and provides services for its clients. The company operates in two segments, Advisory and Trust. The Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, and the Westwood Funds; and investment sub-advisory services to mutual funds, pooled investment vehicles, and its Trust segment. The Trust segment offers trust and custodial services; and participates in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Holdings Group, Inc. was founded in 1983 and is based in Dallas, Texas.