Reviewing KKR & Co. Inc. (NYSE:KKR) & OFS Capital (NASDAQ:OFS)

OFS Capital (NASDAQ:OFS) and KKR & Co. Inc. (NYSE:KKR) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, earnings, risk, profitability and valuation.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for OFS Capital and KKR & Co. Inc., as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OFS Capital	1	2	0	0	1.67
KKR & Co. Inc.	0	4	17	0	2.81

OFS Capital presently has a consensus target price of $7.00, indicating a potential upside of 75.44%. KKR & Co. Inc. has a consensus target price of $123.58, indicating a potential upside of 29.14%. Given OFS Capital’s higher possible upside, equities analysts plainly believe OFS Capital is more favorable than KKR & Co. Inc..

Risk & Volatility

OFS Capital has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, KKR & Co. Inc. has a beta of 1.83, meaning that its share price is 83% more volatile than the S&P 500.

Profitability

This table compares OFS Capital and KKR & Co. Inc.’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OFS Capital	-62.24%	7.46%	2.67%
KKR & Co. Inc.	14.41%	5.88%	1.07%

Valuation and Earnings

This table compares OFS Capital and KKR & Co. Inc.”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OFS Capital	-$17.07 million	-3.13	-$33.09 million	($1.65)	-2.42
KKR & Co. Inc.	$19.46 billion	4.41	$2.37 billion	$3.14	30.48

KKR & Co. Inc. has higher revenue and earnings than OFS Capital. OFS Capital is trading at a lower price-to-earnings ratio than KKR & Co. Inc., indicating that it is currently the more affordable of the two stocks.

Dividends

OFS Capital pays an annual dividend of $0.68 per share and has a dividend yield of 17.0%. KKR & Co. Inc. pays an annual dividend of $0.78 per share and has a dividend yield of 0.8%. OFS Capital pays out -41.2% of its earnings in the form of a dividend. KKR & Co. Inc. pays out 24.8% 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. OFS Capital has increased its dividend for 3 consecutive years and KKR & Co. Inc. has increased its dividend for 5 consecutive years. OFS Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional & Insider Ownership

10.8% of OFS Capital shares are owned by institutional investors. Comparatively, 76.3% of KKR & Co. Inc. shares are owned by institutional investors. 0.5% of OFS Capital shares are owned by insiders. Comparatively, 23.2% of KKR & Co. Inc. shares are owned 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.

Summary

KKR & Co. Inc. beats OFS Capital on 12 of the 17 factors compared between the two stocks.

About OFS Capital

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.

About KKR & Co. Inc.

KKR & Co., Inc. operates as an investment firm. It offers alternative asset management as well as capital markets and insurance solutions. The firm’s business segments include Asset Management and Insurance Business. The Asset Management segment engages in providing private equity, real assets, credit and liquid strategies, capital markets, and principal activities. The Insurance Business segment offers retirement, life insurance and reinsurance solutions to clients across individual and institutional markets. The company was founded by Henry Kravis, George R. Roberts, and Jerome Kholberg on May 1, 1976 and is headquartered in New York, NY.