Arlington Asset Investment (NYSE: AI) and Capitala Finance (NASDAQ:CPTA) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their institutional ownership, profitability, risk, earnings, analyst recommendations, dividends and valuation.
Earnings and Valuation
This table compares Arlington Asset Investment and Capitala Finance’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Arlington Asset Investment||$121.25 million||2.42||$17.43 million||N/A||N/A|
|Capitala Finance||$51.09 million||2.60||-$6.98 million||$0.98||8.47|
This table compares Arlington Asset Investment and Capitala Finance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Arlington Asset Investment||-36.30%||-12.39%||-1.03%|
Insider & Institutional Ownership
37.0% of Arlington Asset Investment shares are owned by institutional investors. Comparatively, 16.8% of Capitala Finance shares are owned by institutional investors. 2.8% of Arlington Asset Investment shares are owned by company insiders. Comparatively, 9.1% of Capitala Finance shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
Arlington Asset Investment pays an annual dividend of $2.20 per share and has a dividend yield of 21.1%. Capitala Finance pays an annual dividend of $1.00 per share and has a dividend yield of 12.0%. Capitala Finance pays out 102.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Risk & Volatility
Arlington Asset Investment has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Capitala Finance has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.
This is a summary of current ratings and recommmendations for Arlington Asset Investment and Capitala Finance, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Arlington Asset Investment||0||3||1||0||2.25|
Arlington Asset Investment currently has a consensus target price of $13.31, suggesting a potential upside of 27.76%. Capitala Finance has a consensus target price of $11.75, suggesting a potential upside of 41.57%. Given Capitala Finance’s stronger consensus rating and higher possible upside, analysts plainly believe Capitala Finance is more favorable than Arlington Asset Investment.
Capitala Finance beats Arlington Asset Investment on 8 of the 13 factors compared between the two stocks.
About Arlington Asset Investment
Arlington Asset Investment Corp. (NYSE: AI) is a principal investment firm that currently invests primarily in mortgage-related and other assets. The Company is headquartered in the Washington, D.C. metropolitan area. For more information, please visit www.arlingtonasset.com.
About Capitala Finance
Capitala Finance Corp. is a Business Development Company specializing in traditional mezzanine, senior subordinated and unitranche debt, first-lien and second-lien loans, equity investments in sponsored and non-sponsored lower and traditional middle market companies. The fund targets companies in the business services, commercial and professional services, manufacturing, consumer and retail, energy, and health-care industries. It typically considers investments in the United States. The fund invests $5 million and $50 million per transaction in companies with greater than $4.5 million of TTM EBITDA. It may also invest in senior secured positions in "stretch" senior secured loans. The fund makes minority equity co-investments, alongside management or financial sponsors.
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