Comparing DeFi Technologies (NASDAQ:DEFT) & Prospect Capital (NASDAQ:PSEC)

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

Institutional & Insider Ownership

9.1% of Prospect Capital shares are owned by institutional investors. 0.0% of Prospect Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
DeFi Technologies	39.65%	15.43%	2.64%
Prospect Capital	19.33%	12.15%	5.54%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for DeFi Technologies and Prospect Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DeFi Technologies	1	1	3	0	2.40
Prospect Capital	2	0	0	0	1.00

DeFi Technologies currently has a consensus target price of $1.44, indicating a potential upside of 176.97%. Prospect Capital has a consensus target price of $2.00, indicating a potential downside of 8.05%. Given DeFi Technologies’ stronger consensus rating and higher probable upside, research analysts clearly believe DeFi Technologies is more favorable than Prospect Capital.

Volatility and Risk

DeFi Technologies has a beta of 4.06, suggesting that its stock price is 306% more volatile than the S&P 500. Comparatively, Prospect Capital has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.

Valuation & Earnings

This table compares DeFi Technologies and Prospect Capital”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DeFi Technologies	$27.29 million	7.38	$62.41 million	$0.06	8.65
Prospect Capital	$193.49 million	5.90	$153.66 million	$0.05	43.50

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

Summary

DeFi Technologies beats Prospect Capital on 8 of the 14 factors compared between the two stocks.

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.

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.