Alcentra Capital (NASDAQ:ABDC) and Federated Investors (NYSE:FII) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, risk, earnings, profitability, dividends, valuation and institutional ownership.

Earnings and Valuation

This table compares Alcentra Capital and Federated Investors’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alcentra Capital $33.35 million 2.57 -$19.10 million $1.32 4.81
Federated Investors $1.10 billion 2.35 $291.34 million $2.18 11.82

Federated Investors has higher revenue and earnings than Alcentra Capital. Alcentra Capital is trading at a lower price-to-earnings ratio than Federated Investors, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Alcentra Capital has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500. Comparatively, Federated Investors has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Alcentra Capital and Federated Investors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alcentra Capital 0 3 0 0 2.00
Federated Investors 1 5 0 0 1.83

Alcentra Capital currently has a consensus target price of $7.00, suggesting a potential upside of 10.24%. Federated Investors has a consensus target price of $26.42, suggesting a potential upside of 2.55%. Given Alcentra Capital’s stronger consensus rating and higher possible upside, equities analysts plainly believe Alcentra Capital is more favorable than Federated Investors.

Institutional and Insider Ownership

30.5% of Alcentra Capital shares are held by institutional investors. Comparatively, 84.3% of Federated Investors shares are held by institutional investors. 0.6% of Alcentra Capital shares are held by insiders. Comparatively, 5.3% of Federated Investors shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Alcentra Capital and Federated Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alcentra Capital -29.76% 9.29% 5.02%
Federated Investors 26.25% 30.19% 18.27%

Dividends

Alcentra Capital pays an annual dividend of $0.72 per share and has a dividend yield of 11.3%. Federated Investors pays an annual dividend of $1.08 per share and has a dividend yield of 4.2%. Alcentra Capital pays out 54.5% of its earnings in the form of a dividend. Federated Investors pays out 49.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Summary

Federated Investors beats Alcentra Capital on 11 of the 15 factors compared between the two stocks.

About Alcentra Capital

Alcentra Capital Corporation is a business development company specializing in investments in lower middle-market companies. The fund seeks to invest in healthcare, business services, defense, government services, telecom and technology, media, infrastructure maintenance and logistics, and oil and gas services sector. It focuses on investment opportunities headquartered in the United States. The fund seeks to invest $5 million to $15 million per transaction in companies with EBITDA between $5 million to $15 million and revenues of between $10 million and $100 million. It invests in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments.

About Federated Investors

Federated Investors, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Investors, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.

Receive News & Ratings for Alcentra Capital Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Alcentra Capital and related companies with MarketBeat.com's FREE daily email newsletter.