Reviewing Palmer Square Capital BDC (NYSE:PSBD) & SLR Investment (NASDAQ:SLRC)

Palmer Square Capital BDC (NYSE:PSBD) and SLR Investment (NASDAQ:SLRC) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, earnings and analyst recommendations.

Institutional & Insider Ownership

6.5% of Palmer Square Capital BDC shares are owned by institutional investors. Comparatively, 35.3% of SLR Investment shares are owned by institutional investors. 1.0% of Palmer Square Capital BDC shares are owned by company insiders. Comparatively, 8.6% of SLR Investment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Palmer Square Capital BDC and SLR Investment”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palmer Square Capital BDC	$143.51 million	2.72	$47.67 million	$0.56	21.70
SLR Investment	$232.43 million	N/A	$95.76 million	$1.62	9.33

SLR Investment has higher revenue and earnings than Palmer Square Capital BDC. SLR Investment is trading at a lower price-to-earnings ratio than Palmer Square Capital BDC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Palmer Square Capital BDC and SLR Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palmer Square Capital BDC	13.51%	10.91%	4.15%
SLR Investment	39.93%	9.26%	3.70%

Analyst Recommendations

This is a summary of recent ratings and target prices for Palmer Square Capital BDC and SLR Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palmer Square Capital BDC	0	3	1	0	2.25
SLR Investment	2	2	2	1	2.29

Palmer Square Capital BDC presently has a consensus target price of $13.88, suggesting a potential upside of 14.20%. SLR Investment has a consensus target price of $16.11, suggesting a potential upside of 6.60%. Given Palmer Square Capital BDC’s higher possible upside, research analysts plainly believe Palmer Square Capital BDC is more favorable than SLR Investment.

Dividends

Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 11.9%. SLR Investment pays an annual dividend of $1.64 per share and has a dividend yield of 10.9%. Palmer Square Capital BDC pays out 257.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SLR Investment pays out 101.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Palmer Square Capital BDC has a beta of 0.72, indicating that its stock price is 28% less volatile than the S&P 500. Comparatively, SLR Investment has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Summary

SLR Investment beats Palmer Square Capital BDC on 11 of the 16 factors compared between the two stocks.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.

About SLR Investment

SLR Investment Corp. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, leveraged buyouts, acquisitions, recapitalizations, general refinancing, growth capital and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate activities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non-precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities. It also invests in life sciences with focus on specialty pharmaceuticals, medical devices, biotech, health Care Providers and services; health Care technology, enabling technologies and tools. The fund primarily invests in United States. The fund’s investments generally range between $5 million and $100 million. The fund invests in companies with revenues between $50 million and $1 billion and EBITDA between $15 million and $100 million. It invests in the form of senior secured loans, mezzanine loans, and equity securities. It may also seek investments in thinly traded public companies and also make secondary investments. The fund makes non-control equity investments. It primarily exits within three years of the initial capital commitment.