Head-To-Head Contrast: Metalpha Technology (NASDAQ:MATH) & Ares Capital (NASDAQ:ARCC)

Ares Capital (NASDAQ:ARCC) and Metalpha Technology (NASDAQ:MATH) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, valuation, earnings, profitability, analyst recommendations, risk and institutional ownership.

Analyst Recommendations

This is a summary of recent ratings and price targets for Ares Capital and Metalpha Technology, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Ares Capital	0	3	5	1	2.78
Metalpha Technology	0	0	0	0	0.00

Ares Capital currently has a consensus price target of $22.14, indicating a potential upside of 6.46%. Given Ares Capital’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Ares Capital is more favorable than Metalpha Technology.

Profitability

This table compares Ares Capital and Metalpha Technology’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Ares Capital	50.90%	11.54%	5.50%
Metalpha Technology	N/A	N/A	N/A

Dividends

Ares Capital pays an annual dividend of $1.92 per share and has a dividend yield of 9.2%. Metalpha Technology pays an annual dividend of $0.10 per share and has a dividend yield of 5.2%. Ares Capital pays out 78.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

27.4% of Ares Capital shares are owned by institutional investors. Comparatively, 30.5% of Metalpha Technology shares are owned by institutional investors. 0.5% of Ares Capital shares are owned by company insiders. Comparatively, 5.9% of Metalpha Technology shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Earnings and Valuation

This table compares Ares Capital and Metalpha Technology”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Ares Capital	$1.71 billion	8.34	$1.52 billion	$2.45	8.49
Metalpha Technology	$30.86 million	2.41	-$3.68 million	N/A	N/A

Ares Capital has higher revenue and earnings than Metalpha Technology.

Volatility and Risk

Ares Capital has a beta of 0.77, indicating that its share price is 23% less volatile than the S&P 500. Comparatively, Metalpha Technology has a beta of -1.17, indicating that its share price is 217% less volatile than the S&P 500.

Summary

Ares Capital beats Metalpha Technology on 12 of the 15 factors compared between the two stocks.

About Ares Capital

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.

About Metalpha Technology

Metalpha Technology Holding Limited, together with its subsidiaries, provides wealth management services in Hong Kong. The company offers digital asset-based wealth management services, which include issuing traditional financial and cryptocurrency derivative products to over-the-counter clients, providing crypto derivative market making services, and proprietary trading of digital assets and crypto derivative products; and securities advising and asset management services. It serves institutional investors and high-net-worth individuals. The company was formerly known as Dragon Victory International Limited and changed its name to Metalpha Technology Holding Limited in November 2022. The company was incorporated in 2015 and is headquartered in Wan Chai, Hong Kong.