OFS Capital Corporation (NASDAQ: OFS) and Invesco Bond Fund (NYSE:VBF) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, analyst recommendations, dividends, institutional ownership, profitability and earnings.
Volatility and Risk
OFS Capital Corporation has a beta of 0.45, indicating that its share price is 55% less volatile than the S&P 500. Comparatively, Invesco Bond Fund has a beta of 0.21, indicating that its share price is 79% less volatile than the S&P 500.
OFS Capital Corporation pays an annual dividend of $1.36 per share and has a dividend yield of 10.5%. Invesco Bond Fund pays an annual dividend of $0.84 per share and has a dividend yield of 4.3%. OFS Capital Corporation pays out 125.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Earnings and Valuation
This table compares OFS Capital Corporation and Invesco Bond Fund’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|OFS Capital Corporation||N/A||N/A||N/A||$1.08||11.94|
|Invesco Bond Fund||N/A||N/A||N/A||N/A||N/A|
This is a breakdown of current recommendations for OFS Capital Corporation and Invesco Bond Fund, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|OFS Capital Corporation||1||1||3||0||2.40|
|Invesco Bond Fund||0||1||0||0||2.00|
OFS Capital Corporation presently has a consensus target price of $14.25, suggesting a potential upside of 10.47%. Invesco Bond Fund has a consensus target price of $32.00, suggesting a potential upside of 65.29%. Given Invesco Bond Fund’s higher possible upside, analysts clearly believe Invesco Bond Fund is more favorable than OFS Capital Corporation.
Institutional & Insider Ownership
25.5% of OFS Capital Corporation shares are held by institutional investors. Comparatively, 23.1% of Invesco Bond Fund shares are held by institutional investors. 0.0% of OFS Capital Corporation shares are held by company insiders. Comparatively, 1.0% of Invesco Bond Fund shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.
This table compares OFS Capital Corporation and Invesco Bond Fund’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|OFS Capital Corporation||31.02%||9.43%||4.69%|
|Invesco Bond Fund||N/A||N/A||N/A|
OFS Capital Corporation beats Invesco Bond Fund on 8 of the 11 factors compared between the two stocks.
About OFS Capital Corporation
OFS Capital Corporation (OFS Capital) is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to provide its shareholders with both current income and capital appreciation primarily through debt investments and equity investments. It focuses primarily on middle-market companies in the United States, including senior secured loans, including first-lien, second-lien and unitranche loans, as well as subordinated loans, and warrants and other minority equity securities. The Company may make investments directly or through OFS SBIC I, LP (SBIC I LP), its investment company subsidiary. It focuses on investments in loans, in which OFS Advisor’s investment professionals have expertise, including investments in first-lien, unitranche, second-lien, and mezzanine loans and, to a lesser extent, on warrants and other equity securities. The Company’s investment activities are managed by OFS Capital Management, LLC (OFS Advisor).
About Invesco Bond Fund
Invesco Bond Fund is a diversified, closed-end management investment company. The Fund’s investment objective is to seek interest income while conserving capital. The Fund invests primarily in fixed-rate the United States investment-grade corporate bonds with flexibility to integrate approximately 20% of its total assets in non-investment-grade, the United States dollar denominated and non-United States dollar denominated securities of foreign issuers (both developed and emerging markets). The Fund also invests in government securities, asset-backed securities, commercial mortgage-backed securities and residential mortgage-backed securities. The Fund also invests in derivatives and other instruments that have similar economic characteristics to securities, in which it invests. Invesco Advisers, Inc. serves as the investment advisor of the Fund.
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