Critical Survey: PennantPark Floating Rate Capital (PFLT) versus Yahoo! (AABA)
PennantPark Floating Rate Capital (NASDAQ: PFLT) and Yahoo! (NASDAQ:AABA) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.
Insider & Institutional Ownership
30.5% of PennantPark Floating Rate Capital shares are owned by institutional investors. Comparatively, 79.3% of Yahoo! shares are owned by institutional investors. 1.2% of PennantPark Floating Rate Capital shares are owned by company insiders. Comparatively, 24.0% of Yahoo! shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
PennantPark Floating Rate Capital pays an annual dividend of $1.14 per share and has a dividend yield of 8.1%. Yahoo! does not pay a dividend. PennantPark Floating Rate Capital pays out 78.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Risk & Volatility
PennantPark Floating Rate Capital has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Yahoo! has a beta of 1.88, suggesting that its share price is 88% more volatile than the S&P 500.
This is a breakdown of recent ratings for PennantPark Floating Rate Capital and Yahoo!, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PennantPark Floating Rate Capital||0||1||4||0||2.80|
PennantPark Floating Rate Capital currently has a consensus price target of $14.90, suggesting a potential upside of 6.50%. Yahoo! has a consensus price target of $51.69, suggesting a potential downside of 27.22%. Given PennantPark Floating Rate Capital’s stronger consensus rating and higher probable upside, research analysts plainly believe PennantPark Floating Rate Capital is more favorable than Yahoo!.
This table compares PennantPark Floating Rate Capital and Yahoo!’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PennantPark Floating Rate Capital||73.28%||7.26%||4.15%|
Earnings and Valuation
This table compares PennantPark Floating Rate Capital and Yahoo!’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|PennantPark Floating Rate Capital||$46.30 million||9.81||$33.49 million||$1.46||9.58|
|Yahoo!||$5.17 billion||12.18||-$214.32 million||($0.02)||-3,549.23|
PennantPark Floating Rate Capital has higher revenue, but lower earnings than Yahoo!. Yahoo! is trading at a lower price-to-earnings ratio than PennantPark Floating Rate Capital, indicating that it is currently the more affordable of the two stocks.
About PennantPark Floating Rate Capital
PennantPark Floating Rate Capital Ltd. is a business development company. The Company is a closed-end, externally managed and non-diversified investment company. Its investment objectives are to generate current income and capital appreciation by investing primarily in floating rate loans and other investments made to the United States middle-market companies. It provides first lien secured debt and other opportunistic financings (senior notes, second lien, mezzanine, private high yield debt, and preferred and common stock) to middle market sponsors and companies. Its investments may include equity features, such as direct investments in the equity securities of borrowers or warrants or options to buy a minority interest in a portfolio company. It has investments in various sectors, including aerospace and defense; consumer services; healthcare and pharmaceuticals, and others. Its investment activities are managed by the investment advisor, PennantPark Investment Advisers, LLC.
Altaba Inc. (the Fund), formerly Yahoo! Inc., is a non-diversified, closed-end management investment company. The Fund seeks to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns. Alibaba Shares represent an approximate 15% equity interest in Alibaba Group Holding Limited (Alibaba), and its Yahoo Japan Corporation ((Yahoo Japa) Shares represent an approximate 36% equity interest in Yahoo Japan. In addition to the Alibaba Shares and the Yahoo Japan Shares, the Fund also owns the minority investments, all of the equity interests in Excalibur IP, LLC (which owns the Excalibur IP Assets) and the marketable debt securities portfolio. The Fund’s external investment advisors are BlackRock Advisors, LLC and Morgan Stanley Smith Barney LLC.
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