Critical Review: KCAP Financial (NASDAQ:KCAP) and Voya Asia Pacific High Divid Eqt Incm Fd (IAE)

KCAP Financial (NASDAQ: KCAP) and Voya Asia Pacific High Divid Eqt Incm Fd (NYSE:IAE) are both small-cap financials companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.

Analyst Recommendations

This is a summary of recent ratings and price targets for KCAP Financial and Voya Asia Pacific High Divid Eqt Incm Fd, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
KCAP Financial 0 2 1 0 2.33
Voya Asia Pacific High Divid Eqt Incm Fd 0 0 0 0 N/A

KCAP Financial presently has a consensus price target of $9.75, indicating a potential upside of 183.43%. Given KCAP Financial’s higher possible upside, analysts plainly believe KCAP Financial is more favorable than Voya Asia Pacific High Divid Eqt Incm Fd.

Profitability

This table compares KCAP Financial and Voya Asia Pacific High Divid Eqt Incm Fd’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
KCAP Financial 7.78% 6.54% 3.46%
Voya Asia Pacific High Divid Eqt Incm Fd N/A N/A N/A

Insider and Institutional Ownership

20.2% of KCAP Financial shares are held by institutional investors. 8.0% of KCAP Financial shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares KCAP Financial and Voya Asia Pacific High Divid Eqt Incm Fd’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
KCAP Financial $36.20 million 3.55 -$1.03 million $0.06 57.33
Voya Asia Pacific High Divid Eqt Incm Fd N/A N/A N/A N/A N/A

Voya Asia Pacific High Divid Eqt Incm Fd has lower revenue, but higher earnings than KCAP Financial.

Risk and Volatility

KCAP Financial has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500. Comparatively, Voya Asia Pacific High Divid Eqt Incm Fd has a beta of 0.97, indicating that its share price is 3% less volatile than the S&P 500.

Dividends

KCAP Financial pays an annual dividend of $0.40 per share and has a dividend yield of 11.6%. Voya Asia Pacific High Divid Eqt Incm Fd does not pay a dividend. KCAP Financial pays out 666.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

KCAP Financial beats Voya Asia Pacific High Divid Eqt Incm Fd on 10 of the 11 factors compared between the two stocks.

KCAP Financial Company Profile

KCAP Financial, Inc. is an internally managed, non-diversified closed-end investment company. The Company has approximately three principal areas of investments. First, the Company originates, structures and invests in senior secured term loans and mezzanine debt primarily in privately-held middle market companies (the debt securities portfolio). In addition, the Company may invest in the equity securities of privately held middle market companies. Second, the Company invests in asset management companies (the Asset Manager Affiliates) that manage collateralized loan obligation funds (CLO Funds). Third, the Company invests in debt and subordinated securities issued by CLOs (CLO fund securities). These CLO fund securities are primarily managed by its Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO funds typically invest in syndicated loans, high-yield bonds and other credit instruments.

Voya Asia Pacific High Divid Eqt Incm Fd Company Profile

Voya Asia Pacific High Dividend Equity Income Fund is a diversified, closed-end management investment company. The Fund’s investment objective is to provide total return through a combination of current income capital gains and capital appreciation. It invests over 80% of its managed assets in dividend-producing equity securities of, or derivatives having economic characteristics similar to the equity securities of, Asia Pacific companies that are listed and traded principally on Asia Pacific exchanges. It sells call options on selected Asia-Pacific indexes and/or equity securities and/or exchange traded funds, with the underlying value of such calls representing 0 to 50% of the value of the Fund’s equity securities. It invests in various sectors, including financials, information technology, consumer staples, energy, utilities, consumer discretionary, industrials, materials and healthcare. Its investment advisor is Voya Investments, LLC and NNIP Advisors B.V. is the sub-advisor.

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