Analyzing Sprott (NYSE:SII) and Eagle Point Credit (NYSE:ECC)

Sprott (NYSE:SII) and Eagle Point Credit (NYSE:ECC) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.

Risk & Volatility

Sprott has a beta of 0.95, suggesting that its stock price is 5% less volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.37, suggesting that its stock price is 63% less volatile than the S&P 500.

Earnings & Valuation

This table compares Sprott and Eagle Point Credit”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprott	$178.65 million	11.73	$49.29 million	$1.95	41.68
Eagle Point Credit	$179.77 million	3.97	$85.49 million	$0.19	29.74

Eagle Point Credit has higher revenue and earnings than Sprott. Eagle Point Credit is trading at a lower price-to-earnings ratio than Sprott, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Sprott and Eagle Point Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sprott	23.26%	15.01%	11.97%
Eagle Point Credit	12.33%	13.53%	8.26%

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Sprott and Eagle Point Credit, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprott	0	1	3	0	2.75
Eagle Point Credit	0	2	3	1	2.83

Eagle Point Credit has a consensus target price of $7.46, suggesting a potential upside of 32.01%. Given Eagle Point Credit’s stronger consensus rating and higher possible upside, analysts plainly believe Eagle Point Credit is more favorable than Sprott.

Dividends

Sprott pays an annual dividend of $1.60 per share and has a dividend yield of 2.0%. Eagle Point Credit pays an annual dividend of $1.68 per share and has a dividend yield of 29.7%. Sprott pays out 82.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit pays out 884.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprott has raised its dividend for 1 consecutive years.

Institutional and Insider Ownership

28.3% of Sprott shares are owned by institutional investors. Comparatively, 19.5% of Eagle Point Credit shares are owned by institutional investors. 18.3% of Sprott shares are owned by company insiders. Comparatively, 0.2% of Eagle Point Credit shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Sprott beats Eagle Point Credit on 11 of the 17 factors compared between the two stocks.

About Sprott

Sprott Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides asset management, portfolio management, wealth management, fund management, and administrative and consulting services to its clients. It offers mutual funds, hedge funds, and offshore funds, along with managed accounts. Further, the firm also provides broker-dealer activities. Sprott Inc. was formed on February 13, 2008 and is based in Toronto, Canada.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.