Analyzing Prospect Capital (NASDAQ:PSEC) & Binah Capital Group (NASDAQ:BCG)

Prospect Capital (NASDAQ:PSEC) and Binah Capital Group (NASDAQ:BCG) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their valuation, profitability, risk, analyst recommendations, dividends, earnings and institutional ownership.

Valuation and Earnings

This table compares Prospect Capital and Binah Capital Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prospect Capital	$719.44 million	1.77	-$469.92 million	($0.86)	-3.15
Binah Capital Group	$168.90 million	0.26	-$4.56 million	$0.03	87.67

Binah Capital Group has lower revenue, but higher earnings than Prospect Capital. Prospect Capital is trading at a lower price-to-earnings ratio than Binah Capital Group, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

Prospect Capital has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Binah Capital Group has a beta of 0.33, suggesting that its share price is 67% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Prospect Capital and Binah Capital Group, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prospect Capital	2	0	0	0	1.00
Binah Capital Group	1	0	0	0	1.00

Prospect Capital presently has a consensus target price of $2.50, indicating a potential downside of 7.75%. Given Prospect Capital’s higher possible upside, research analysts clearly believe Prospect Capital is more favorable than Binah Capital Group.

Profitability

This table compares Prospect Capital and Binah Capital Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prospect Capital	-42.50%	12.29%	5.63%
Binah Capital Group	0.58%	509.27%	1.55%

Insider & Institutional Ownership

9.1% of Prospect Capital shares are owned by institutional investors. Comparatively, 5.0% of Binah Capital Group shares are owned by institutional investors. 28.0% of Prospect Capital shares are owned by company insiders. Comparatively, 1.9% of Binah Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Prospect Capital beats Binah Capital Group on 7 of the 12 factors compared between the two stocks.

About Prospect Capital

Prospect Capital Corporation is a business development company. It specializes in middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions. It also makes real estate investments particularly in multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses. It focuses on both primary origination and secondary loans/portfolios and invests in situations like debt financings for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, real estate financings/investments. It also focuses on investing in small-sized and medium-sized private companies rather than large public companies. The fund typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors. It invests in aerospace and defense, chemicals, conglomerate services, consumer services, ecological, electronics, financial services, machinery, manufacturing, media, pharmaceuticals, retail, software, specialty minerals, textiles and leather, transportation, oil and gas production, coal production, materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors. It prefers to invest in the United States and Canada. The fund seeks to invest between $10 million to $500 million per transaction in companies with EBITDA between $5 million and $150 million, sales value between $25 million and $500 million, and enterprise value between $5 million and $1000 million. It fund also co-invests for larger deals. The fund seeks control acquisitions by providing multiple levels of the capital structure. The fund focuses on sole, agented, club, or syndicated deals.

About Binah Capital Group

Binah Capital Group, Inc., together with its subsidiaries, operates in the wealth management industry. The company provides access to stock, bond, exchange-traded fund, and options execution services; and research, compliance, supervision, and accounting and related services for financial advisors. It also offers mutual funds and insurance products, as well as alternative investments, such as non-traded real estate investment trusts, unit trusts, and fixed and variable annuities. The company was founded in 2016 and is headquartered in Albany, New York. Binah Capital Group, Inc. operates as a subsidiary of MHC Securities, LLC.