Head to Head Survey: Palmer Square Capital BDC (NYSE:PSBD) and Virtus Investment Partners (NASDAQ:VRTS)

Virtus Investment Partners (NASDAQ:VRTS) and Palmer Square Capital BDC (NYSE:PSBD) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Virtus Investment Partners and Palmer Square Capital BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Virtus Investment Partners	2	2	1	0	1.80
Palmer Square Capital BDC	0	5	0	0	2.00

Virtus Investment Partners currently has a consensus price target of $143.00, indicating a potential upside of 8.72%. Palmer Square Capital BDC has a consensus price target of $10.50, indicating a potential upside of 8.97%. Given Palmer Square Capital BDC’s stronger consensus rating and higher probable upside, analysts plainly believe Palmer Square Capital BDC is more favorable than Virtus Investment Partners.

Dividends

Virtus Investment Partners pays an annual dividend of $9.80 per share and has a dividend yield of 7.5%. Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 14.9%. Virtus Investment Partners pays out 55.8% of its earnings in the form of a dividend. Palmer Square Capital BDC pays out -145.5% 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. Palmer Square Capital BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Virtus Investment Partners has a beta of 1.41, meaning that its stock price is 41% more volatile than the S&P 500. Comparatively, Palmer Square Capital BDC has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.

Insider and Institutional Ownership

80.5% of Virtus Investment Partners shares are owned by institutional investors. Comparatively, 6.5% of Palmer Square Capital BDC shares are owned by institutional investors. 6.4% of Virtus Investment Partners shares are owned by company insiders. Comparatively, 1.1% of Palmer Square Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Virtus Investment Partners and Palmer Square Capital BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Virtus Investment Partners	$819.58 million	1.06	$121.75 million	$17.55	7.49
Palmer Square Capital BDC	$124.39 million	2.37	-$3.17 million	($0.99)	-9.73

Virtus Investment Partners has higher revenue and earnings than Palmer Square Capital BDC. Palmer Square Capital BDC is trading at a lower price-to-earnings ratio than Virtus Investment Partners, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Virtus Investment Partners and Palmer Square Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Virtus Investment Partners	13.42%	21.56%	5.27%
Palmer Square Capital BDC	-26.73%	11.22%	4.15%

Summary

Virtus Investment Partners beats Palmer Square Capital BDC on 11 of the 16 factors compared between the two stocks.

About Virtus Investment Partners

Virtus Investment Partners, Inc. is a publicly owned investment manager. The firm primarily provides its services to individual and institutional clients. It launches separate client focused equity and fixed income portfolios. The firm launches equity, fixed income, and balanced mutual funds for its clients. It invests in the public equity, fixed income, and real estate markets. The firm also invests in exchange traded funds. It employs a multi manager approach for its products. The firm employs quantitative analysis to make its investments. It benchmarks the performance of its portfolios against the S&P 500 Index. The firm conducts in-house research to make its investments. Virtus Investment Partners, Inc. was founded in 1988 and is based in Hartford, Connecticut.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.