Head to Head Analysis: OFS Credit (NASDAQ:OCCI) & Sound Point Meridian Capital (NYSE:SPMC)

OFS Credit (NASDAQ:OCCI) and Sound Point Meridian Capital (NYSE:SPMC) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, risk, dividends and earnings.

Earnings & Valuation

This table compares OFS Credit and Sound Point Meridian Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OFS Credit	$44.15 million	1.96	-$35.49 million	($1.22)	-2.44
Sound Point Meridian Capital	$72.51 million	3.19	-$125.87 million	($6.14)	-1.84

OFS Credit has higher earnings, but lower revenue than Sound Point Meridian Capital. OFS Credit is trading at a lower price-to-earnings ratio than Sound Point Meridian Capital, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

OFS Credit has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500. Comparatively, Sound Point Meridian Capital has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.

Insider and Institutional Ownership

23.8% of OFS Credit shares are owned by institutional investors. 1.0% of OFS Credit shares are owned by insiders. Comparatively, 0.9% of Sound Point Meridian Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Profitability

This table compares OFS Credit and Sound Point Meridian Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OFS Credit	N/A	N/A	N/A
Sound Point Meridian Capital	N/A	N/A	N/A

Analyst Recommendations

This is a summary of current ratings and recommmendations for OFS Credit and Sound Point Meridian Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OFS Credit	0	0	0	0	0.00
Sound Point Meridian Capital	1	2	1	0	2.00

Sound Point Meridian Capital has a consensus target price of $16.10, indicating a potential upside of 42.72%. Given Sound Point Meridian Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Sound Point Meridian Capital is more favorable than OFS Credit.

Dividends

OFS Credit pays an annual dividend of $1.18 per share and has a dividend yield of 39.6%. Sound Point Meridian Capital pays an annual dividend of $2.40 per share and has a dividend yield of 21.3%. OFS Credit pays out -96.7% of its earnings in the form of a dividend. Sound Point Meridian Capital pays out -39.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. OFS Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Sound Point Meridian Capital beats OFS Credit on 7 of the 13 factors compared between the two stocks.

About OFS Credit

OFS Credit Company, Inc. is a fund of OFS Advisor.

About Sound Point Meridian Capital

Sound Point Meridian Capital Inc. is an externally managed, non-diversified closed-end management investment company. Its investment objective is to generate high current income, with a secondary objective to generate capital appreciation, by investing primarily in third-party collateralized loan obligation equity and mezzanine tranches. Sound Point Meridian Capital Inc. is based in NEW YORK.