Contrasting Prospect Capital (NASDAQ:PSEC) & Janus Henderson Group (NYSE:JHG)

Janus Henderson Group (NYSE:JHG) and Prospect Capital (NASDAQ:PSEC) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, analyst recommendations and risk.

Analyst Ratings

This is a summary of current recommendations and price targets for Janus Henderson Group and Prospect Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Janus Henderson Group	0	5	1	1	2.43
Prospect Capital	2	0	0	0	1.00

Janus Henderson Group presently has a consensus price target of $49.40, suggesting a potential downside of 4.91%. Prospect Capital has a consensus price target of $2.00, suggesting a potential downside of 5.66%. Given Janus Henderson Group’s stronger consensus rating and higher probable upside, research analysts clearly believe Janus Henderson Group is more favorable than Prospect Capital.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Janus Henderson Group	24.33%	14.59%	9.56%
Prospect Capital	-10.42%	12.03%	5.43%

Dividends

Janus Henderson Group pays an annual dividend of $1.20 per share and has a dividend yield of 2.3%. Prospect Capital pays an annual dividend of $0.42 per share and has a dividend yield of 19.8%. Janus Henderson Group pays out 23.6% of its earnings in the form of a dividend. Prospect Capital pays out -113.5% 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. Janus Henderson Group has raised its dividend for 1 consecutive years. Prospect Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Janus Henderson Group has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Prospect Capital has a beta of 0.78, suggesting that its stock price is 22% less volatile than the S&P 500.

Valuation and Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Janus Henderson Group	$3.17 billion	2.53	$815.90 million	$5.08	10.23
Prospect Capital	$7.61 million	139.53	-$469.92 million	($0.37)	-5.73

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

Insider & Institutional Ownership

87.9% of Janus Henderson Group shares are held by institutional investors. Comparatively, 9.1% of Prospect Capital shares are held by institutional investors. 21.0% of Janus Henderson Group shares are held by company insiders. Comparatively, 0.0% of Prospect Capital shares are held 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.

Summary

Janus Henderson Group beats Prospect Capital on 15 of the 18 factors compared between the two stocks.

About Janus Henderson Group

Janus Henderson Group plc is an asset management holding entity. Through its subsidiaries, the firm provides services to institutional, retail clients, and high net worth clients. It manages separate client-focused equity and fixed income portfolios. The firm also manages equity, fixed income, and balanced mutual funds for its clients. It invests in public equity and fixed income markets, as well as invests in real estate and private equity. Janus Henderson Group plc was founded in 1934 and is based in London, United Kingdom with additional offices in Jersey, United Kingdom and Sydney, Australia.

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.