Ares Capital (NASDAQ:ARCC – Get Free Report) and DeFi Technologies (NASDAQ:DEFT – Get Free Report) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, valuation, risk and earnings.
Volatility & Risk
Ares Capital has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, DeFi Technologies has a beta of 4.06, meaning that its share price is 306% more volatile than the S&P 500.
Analyst Ratings
This is a summary of current ratings and target prices for Ares Capital and DeFi Technologies, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Ares Capital | 0 | 3 | 8 | 0 | 2.73 |
| DeFi Technologies | 1 | 1 | 3 | 0 | 2.40 |
Valuation and Earnings
This table compares Ares Capital and DeFi Technologies”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Ares Capital | $3.05 billion | 4.72 | $1.30 billion | $1.35 | 14.87 |
| DeFi Technologies | $99.14 million | 2.61 | $62.41 million | $0.06 | 11.13 |
Ares Capital has higher revenue and earnings than DeFi Technologies. DeFi Technologies is trading at a lower price-to-earnings ratio than Ares Capital, indicating that it is currently the more affordable of the two stocks.
Institutional and Insider Ownership
27.4% of Ares Capital shares are held by institutional investors. 0.5% of Ares Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Ares Capital and DeFi Technologies’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Ares Capital | 30.91% | 9.80% | 4.50% |
| DeFi Technologies | 39.65% | 15.43% | 2.64% |
Summary
Ares Capital beats DeFi Technologies on 10 of the 14 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 DeFi Technologies
DeFi Technologies, Inc. engages in the provision of investment services. It plans to acquire equity, debt, or other securities of publicly traded or private companies or other entities. The firm offers DeFi ETNs, DeFi Governance, DeFi Venture and DeFi Treasury. The company was founded by Olivier Francois Roussy Newton and Wouter Witvoet on April 14, 1986 and is headquartered in Toronto, Canada.
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