PennantPark Investment Corporation (NASDAQ: PNNT) and Liberty All-Star Equity Fund (NYSE:USA) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.
Volatility and Risk
PennantPark Investment Corporation has a beta of 1.26, suggesting that its stock price is 26% more volatile than the S&P 500. Comparatively, Liberty All-Star Equity Fund has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for PennantPark Investment Corporation and Liberty All-Star Equity Fund, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PennantPark Investment Corporation||0||7||2||0||2.22|
|Liberty All-Star Equity Fund||0||2||2||0||2.50|
PennantPark Investment Corporation presently has a consensus target price of $8.07, indicating a potential upside of 4.69%. Liberty All-Star Equity Fund has a consensus target price of $44.50, indicating a potential upside of 693.23%. Given Liberty All-Star Equity Fund’s stronger consensus rating and higher probable upside, analysts clearly believe Liberty All-Star Equity Fund is more favorable than PennantPark Investment Corporation.
Insider & Institutional Ownership
43.8% of PennantPark Investment Corporation shares are owned by institutional investors. Comparatively, 31.1% of Liberty All-Star Equity Fund shares are owned by institutional investors. 1.9% of PennantPark Investment Corporation shares are owned by company insiders. Comparatively, 0.1% of Liberty All-Star Equity Fund shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
PennantPark Investment Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 9.3%. Liberty All-Star Equity Fund pays an annual dividend of $0.13 per share and has a dividend yield of 2.3%. PennantPark Investment Corporation pays out 74.2% of its earnings in the form of a dividend.
Earnings and Valuation
This table compares PennantPark Investment Corporation and Liberty All-Star Equity Fund’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|PennantPark Investment Corporation||N/A||N/A||N/A||$0.97||7.95|
|Liberty All-Star Equity Fund||N/A||N/A||N/A||N/A||N/A|
This table compares PennantPark Investment Corporation and Liberty All-Star Equity Fund’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PennantPark Investment Corporation||53.92%||9.11%||4.72%|
|Liberty All-Star Equity Fund||N/A||N/A||N/A|
PennantPark Investment Corporation beats Liberty All-Star Equity Fund on 7 of the 10 factors compared between the two stocks.
About PennantPark Investment Corporation
PennantPark Investment Corporation is a closed-end, non-diversified investment company. The Company is a business development company. Its objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to the United States middle-market companies in the form of senior secured debt, mezzanine debt and equity investments. The Company’s debt investments may generally range in maturity from 3 to 10 years and, are made to the United States and to a limited extent, non-United States corporations, partnerships and other business entities, which operate in various industries and geographical regions. In addition, it may invest up to approximately 30% of its portfolio in non-qualifying assets. It invests in sectors, such as aerospace and defense; energy/utilities; auto sector; environmental services, and beverage, among others. PennantPark Investment Advisers, LLC is the Company’s investment advisor.
About Liberty All-Star Equity Fund
Liberty All-Star Equity Fund is a diversified, closed-end management investment fund. The Fund seeks total investment return comprising long-term capital appreciation and current income through investing primarily in a diversified portfolio of equity securities. It allocates its portfolio assets on an approximately equal basis among several independent investment management organizations having various investment styles recommended and monitored by its investment advisor. It invests at least 80% of its net assets in a diversified portfolio of equity securities. The Fund invests in various sectors, including financials, information technology, healthcare, consumer discretionary, consumer staples, industrials, energy, materials, real estate, utilities and telecommunication services. Its investment managers invest primarily for pension funds, endowments, foundations and other institutions. The Fund’s investment advisor is ALPS Advisors, Inc.
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