Arlington Asset Investment Corp (NYSE: AI) and Safeguard Scientifics (NYSE:SFE) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.
Valuation and Earnings
This table compares Arlington Asset Investment Corp and Safeguard Scientifics’ top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| Arlington Asset Investment Corp | $45.40 million | 7.45 | -$38.93 million | ($1.50) | -8.69 |
| Safeguard Scientifics | N/A | N/A | -$17.72 million | ($4.76) | -2.51 |
Safeguard Scientifics has higher revenue, but lower earnings than Arlington Asset Investment Corp. Arlington Asset Investment Corp is trading at a lower price-to-earnings ratio than Safeguard Scientifics, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Arlington Asset Investment Corp has a beta of 1.14, suggesting that its share price is 14% more volatile than the S&P 500. Comparatively, Safeguard Scientifics has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500.
Insider & Institutional Ownership
42.4% of Arlington Asset Investment Corp shares are held by institutional investors. Comparatively, 75.3% of Safeguard Scientifics shares are held by institutional investors. 2.7% of Arlington Asset Investment Corp shares are held by insiders. Comparatively, 2.7% of Safeguard Scientifics shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Arlington Asset Investment Corp and Safeguard Scientifics’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Arlington Asset Investment Corp | -33.84% | -10.44% | -0.93% |
| Safeguard Scientifics | N/A | -61.90% | -42.77% |
Analyst Recommendations
This is a summary of recent ratings and price targets for Arlington Asset Investment Corp and Safeguard Scientifics, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Arlington Asset Investment Corp | 0 | 2 | 2 | 0 | 2.50 |
| Safeguard Scientifics | 0 | 0 | 0 | 0 | N/A |
Arlington Asset Investment Corp presently has a consensus price target of $14.94, indicating a potential upside of 14.64%. Given Arlington Asset Investment Corp’s higher probable upside, equities research analysts plainly believe Arlington Asset Investment Corp is more favorable than Safeguard Scientifics.
Dividends
Arlington Asset Investment Corp pays an annual dividend of $2.20 per share and has a dividend yield of 16.9%. Safeguard Scientifics does not pay a dividend. Arlington Asset Investment Corp pays out -146.7% of its earnings in the form of a dividend.
Summary
Arlington Asset Investment Corp beats Safeguard Scientifics on 9 of the 13 factors compared between the two stocks.
Arlington Asset Investment Corp Company Profile
Arlington Asset Investment Corp. is an investment company. The Company focuses on acquiring and holding a levered portfolio of residential mortgage-backed securities (MBS), consisting of agency MBS and private-label MBS. Agency MBS include residential mortgage pass-through certificates for which the principal and interest payments are guaranteed by a United States Government agency or government-sponsored enterprise (GSE), such as the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). Private-label MBS, or non-agency MBS, include residential MBS that are not guaranteed by a GSE or the United States Government. The Company funds its investments primarily through short-term financing arrangements. The Company purchases agency MBS either in initial offerings or in the secondary market through broker-dealers or similar entities. It may invest in agency MBS collateralized by adjustable-rate mortgage loans (ARMs) or hybrid ARMs.
Safeguard Scientifics Company Profile
Safeguard Scientifics, Inc. is engaged in providing capital to technology companies within the fields of healthcare, financial services and digital media. The Company holds interest in companies, which it refers to as partner companies. As of December 31, 2016, the Company held interests in 29 non-consolidated partner companies. The Company offers operational and management support to each of its partner companies. In addition to management and operational support, the Company offers ongoing planning and development assessment. It provides mentoring, advice and guidance to develop partner company management. The Company serves on the boards of directors of its partner companies, working with them to develop and implement strategic and operating plans. It measures and monitors achievement of these plans through regular review of operational and financial performance measurements.
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