Reviewing OFS Capital (NASDAQ:OFS) & KKR & Co. Inc. (NYSE:KKR)

KKR & Co. Inc. (NYSE:KKR) and OFS Capital (NASDAQ:OFS) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, analyst recommendations, institutional ownership, valuation, earnings, profitability and risk.

Volatility & Risk

KKR & Co. Inc. has a beta of 1.83, suggesting that its stock price is 83% more volatile than the S&P 500. Comparatively, OFS Capital has a beta of 0.86, suggesting that its stock price is 14% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for KKR & Co. Inc. and OFS Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
KKR & Co. Inc.	0	4	17	0	2.81
OFS Capital	1	2	0	0	1.67

KKR & Co. Inc. currently has a consensus price target of $123.58, indicating a potential upside of 26.19%. OFS Capital has a consensus price target of $7.00, indicating a potential upside of 94.44%. Given OFS Capital’s higher possible upside, analysts plainly believe OFS Capital is more favorable than KKR & Co. Inc..

Dividends

KKR & Co. Inc. pays an annual dividend of $0.78 per share and has a dividend yield of 0.8%. OFS Capital pays an annual dividend of $0.68 per share and has a dividend yield of 18.9%. KKR & Co. Inc. pays out 24.8% of its earnings in the form of a dividend. OFS Capital pays out -32.2% 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. KKR & Co. Inc. has raised its dividend for 5 consecutive years and OFS Capital has raised its dividend for 3 consecutive years. OFS Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares KKR & Co. Inc. and OFS Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
KKR & Co. Inc.	$19.46 billion	4.52	$2.37 billion	$3.14	31.19
OFS Capital	$40.69 million	1.19	-$33.09 million	($2.11)	-1.71

KKR & Co. Inc. has higher revenue and earnings than OFS Capital. OFS Capital is trading at a lower price-to-earnings ratio than KKR & Co. Inc., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares KKR & Co. Inc. and OFS Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
KKR & Co. Inc.	14.41%	5.88%	1.07%
OFS Capital	-62.24%	7.46%	2.67%

Institutional & Insider Ownership

76.3% of KKR & Co. Inc. shares are held by institutional investors. Comparatively, 10.8% of OFS Capital shares are held by institutional investors. 23.2% of KKR & Co. Inc. shares are held by insiders. Comparatively, 0.5% of OFS Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Summary

KKR & Co. Inc. beats OFS Capital on 12 of the 17 factors compared between the two stocks.

About KKR & Co. Inc.

KKR & Co., Inc. operates as an investment firm. It offers alternative asset management as well as capital markets and insurance solutions. The firm’s business segments include Asset Management and Insurance Business. The Asset Management segment engages in providing private equity, real assets, credit and liquid strategies, capital markets, and principal activities. The Insurance Business segment offers retirement, life insurance and reinsurance solutions to clients across individual and institutional markets. The company was founded by Henry Kravis, George R. Roberts, and Jerome Kholberg on May 1, 1976 and is headquartered in New York, NY.

About OFS Capital

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.