Nomura (NYSE:NMR) and FS KKR Capital (NYSE:FSK) Financial Comparison

Nomura (NYSE:NMR) and FS KKR Capital (NYSE:FSK) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, risk, analyst recommendations, profitability, dividends, earnings and valuation.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Nomura and FS KKR Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Nomura	0	1	4	1	3.00
FS KKR Capital	2	6	0	0	1.75

Nomura presently has a consensus price target of $10.20, indicating a potential upside of 8.45%. FS KKR Capital has a consensus price target of $11.43, indicating a potential downside of 2.28%. Given Nomura’s stronger consensus rating and higher possible upside, equities analysts clearly believe Nomura is more favorable than FS KKR Capital.

Valuation & Earnings

This table compares Nomura and FS KKR Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Nomura	$31.61 billion	0.87	$2.39 billion	$0.86	10.94
FS KKR Capital	$1.52 billion	2.13	$11.00 million	($1.35)	-8.66

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

Insider & Institutional Ownership

15.1% of Nomura shares are owned by institutional investors. Comparatively, 36.3% of FS KKR Capital shares are owned by institutional investors. 0.0% of Nomura shares are owned by company insiders. Comparatively, 0.2% of FS KKR Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Nomura pays an annual dividend of $0.24 per share and has a dividend yield of 2.6%. FS KKR Capital pays an annual dividend of $1.76 per share and has a dividend yield of 15.0%. Nomura pays out 27.9% of its earnings in the form of a dividend. FS KKR Capital pays out -130.4% 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. FS KKR Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Nomura and FS KKR Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Nomura	8.06%	10.51%	0.63%
FS KKR Capital	-28.52%	9.70%	4.14%

Risk and Volatility

Nomura has a beta of 0.81, indicating that its stock price is 19% less volatile than the S&P 500. Comparatively, FS KKR Capital has a beta of 0.88, indicating that its stock price is 12% less volatile than the S&P 500.

Summary

Nomura beats FS KKR Capital on 10 of the 17 factors compared between the two stocks.

About Nomura

Nomura Holdings, Inc. provides various financial services to individuals, corporations, financial institutions, governments, and governmental agencies worldwide. It operates through three segments: Retail, Investment Management, and Wholesale. The Retail segment offers various financial products and investment consultation services. The Investment Management segment engages in the management of funds, investment trusts, and other investment solutions; and provision of investment advisory, custodial, and administrative services. The Wholesale segment is involved in the research, sale, trading, agency execution, and market-making of fixed income and equity-related products. This segment also engages in underwriting various securities and other financial instruments, such as various classes of shares, convertible and exchangeable securities, investment grade and high yield debts, sovereign and emerging market debts, structured securities, and other securities; arranging private placements, as well as other capital raising activities; and the provision of financial advisory services on business transactions comprising mergers and acquisitions, divestitures, spin-offs, capital structuring, corporate defense activities, leveraged buyouts, and risk solutions. The company was formerly known as The Nomura Securities Co., Ltd. and changed its name to Nomura Holdings, Inc. in October 2001. Nomura Holdings, Inc. was incorporated in 1925 and is headquartered in Tokyo, Japan.

About FS KKR Capital

FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.