Head to Head Review: U.S. Global Investors (NASDAQ:GROW) & Hercules Capital (NYSE:HTGC)

Hercules Capital (NYSE:HTGC) and U.S. Global Investors (NASDAQ:GROW) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, dividends, earnings and risk.

Insider and Institutional Ownership

19.7% of Hercules Capital shares are held by institutional investors. Comparatively, 23.6% of U.S. Global Investors shares are held by institutional investors. 2.0% of Hercules Capital shares are held by company insiders. Comparatively, 19.2% of U.S. Global Investors shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Dividends

Hercules Capital pays an annual dividend of $1.60 per share and has a dividend yield of 10.1%. U.S. Global Investors pays an annual dividend of $0.09 per share and has a dividend yield of 3.4%. Hercules Capital pays out 86.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. U.S. Global Investors pays out 36.0% of its earnings in the form of a dividend. Hercules Capital has increased its dividend for 1 consecutive years. Hercules Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Hercules Capital has a beta of 0.82, indicating that its stock price is 18% less volatile than the S&P 500. Comparatively, U.S. Global Investors has a beta of 0.66, indicating that its stock price is 34% less volatile than the S&P 500.

Valuation and Earnings

This table compares Hercules Capital and U.S. Global Investors”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Hercules Capital	$532.49 million	5.65	$339.74 million	$1.86	8.54
U.S. Global Investors	$10.25 million	3.16	$3.06 million	$0.25	10.54

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

Profitability

This table compares Hercules Capital and U.S. Global Investors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hercules Capital	62.84%	15.72%	7.46%
U.S. Global Investors	29.81%	6.70%	6.30%

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Hercules Capital and U.S. Global Investors, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hercules Capital	0	2	5	1	2.88
U.S. Global Investors	0	1	0	0	2.00

Hercules Capital currently has a consensus target price of $18.89, indicating a potential upside of 18.94%. Given Hercules Capital’s stronger consensus rating and higher probable upside, equities analysts clearly believe Hercules Capital is more favorable than U.S. Global Investors.

Summary

Hercules Capital beats U.S. Global Investors on 14 of the 18 factors compared between the two stocks.

About Hercules Capital

Hercules Capital, Inc. is a specialty finance company and business development company that provides financing to venture capital-backed businesses. Its lending focuses primarily on companies in the technology, life sciences and sustainable and renewable technology sectors. The company offers venture debt and growth capital through products such as senior secured loans, equipment financing and working capital facilities. Its financing is designed to support businesses at different stages, including product development, expansion and other growth initiatives.

About U.S. Global Investors

U.S. Global Investors, Inc. (NASDAQ:GROW) is an investment management company headquartered in San Antonio, Texas. The company provides investment advisory and management services to mutual funds, exchange-traded funds and other investment accounts. Its investment products focus on specialized areas of the global economy, including natural resources, precious metals, emerging markets, global infrastructure, airlines and maritime transportation. The company also offers separately managed accounts and related shareholder and fund administration services.