Head to Head Contrast: Fifth Street Senior Floating Rate Corp. (OCSI) & Alcentra Capital Corp. (ABDC)

Fifth Street Senior Floating Rate Corp. (NASDAQ: OCSI) and Alcentra Capital Corp. (NASDAQ:ABDC) are both small-cap closed end funds companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, earnings and profitability.

Institutional & Insider Ownership

21.4% of Fifth Street Senior Floating Rate Corp. shares are owned by institutional investors. Comparatively, 31.0% of Alcentra Capital Corp. shares are owned by institutional investors. 0.4% of Fifth Street Senior Floating Rate Corp. shares are owned by insiders. Comparatively, 5.0% of Alcentra Capital Corp. shares are owned by 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.

Analyst Recommendations

This is a summary of recent ratings for Fifth Street Senior Floating Rate Corp. and Alcentra Capital Corp., as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fifth Street Senior Floating Rate Corp. 0 2 0 0 2.00
Alcentra Capital Corp. 2 1 1 0 1.75

Fifth Street Senior Floating Rate Corp. presently has a consensus target price of $9.25, suggesting a potential upside of 10.12%. Alcentra Capital Corp. has a consensus target price of $12.83, suggesting a potential upside of 82.55%. Given Alcentra Capital Corp.’s higher probable upside, analysts plainly believe Alcentra Capital Corp. is more favorable than Fifth Street Senior Floating Rate Corp..

Volatility and Risk

Fifth Street Senior Floating Rate Corp. has a beta of 0.33, meaning that its stock price is 67% less volatile than the S&P 500. Comparatively, Alcentra Capital Corp. has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.

Dividends

Fifth Street Senior Floating Rate Corp. pays an annual dividend of $0.76 per share and has a dividend yield of 9.0%. Alcentra Capital Corp. pays an annual dividend of $1.36 per share and has a dividend yield of 19.3%. Alcentra Capital Corp. pays out -2,719.5% of its earnings in the form of a dividend.

Valuation & Earnings

This table compares Fifth Street Senior Floating Rate Corp. and Alcentra Capital Corp.’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Fifth Street Senior Floating Rate Corp. $53.43 million 4.63 -$4.45 million N/A N/A
Alcentra Capital Corp. $40.60 million 2.47 $8.78 million ($0.05) -140.57

Alcentra Capital Corp. has higher revenue, but lower earnings than Fifth Street Senior Floating Rate Corp..

Profitability

This table compares Fifth Street Senior Floating Rate Corp. and Alcentra Capital Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fifth Street Senior Floating Rate Corp. 29.89% 7.27% 3.83%
Alcentra Capital Corp. -2.25% 11.32% 7.03%

Summary

Alcentra Capital Corp. beats Fifth Street Senior Floating Rate Corp. on 10 of the 15 factors compared between the two stocks.

Fifth Street Senior Floating Rate Corp. Company Profile

Oaktree Strategic Income Corporation, formerly Fifth Street Senior Floating Rate Corp., is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. The Company’s investment advisor is Oaktree Capital Management, L.P.

Alcentra Capital Corp. Company Profile

Alcentra Capital Corporation is a specialty finance company that operates as a non-diversified, closed-end management investment company. The Company operates as a business development company and a regulated investment company. It provides customized debt and equity financing solutions to lower middle-market companies, which are companies having annual earnings, before interest, taxes, depreciation and amortization of between $5 million and $15 million, and/or revenues of between $10 million and $100 million. Its investments range in size from $5 million to $15 million. Its investment objective is to generate both current income and capital appreciation primarily by making direct investments in lower middle-market companies in the form of senior debt, unitranche, second lien, subordinated debt and, to a lesser extent, senior debt and minority equity investments. Its investment focus is to make loans to, and selected equity investments in, privately-held lower-middle-market companies.

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