Horizon Technology Finance (NASDAQ:HRZN – Get Free Report) and Barings Bdc (NYSE:BBDC – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, institutional ownership, analyst recommendations, earnings and profitability.
Dividends
Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 15.8%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 11.7%. Horizon Technology Finance pays out 167.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc pays out 122.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has increased its dividend for 3 consecutive years.
Valuation & Earnings
This table compares Horizon Technology Finance and Barings Bdc”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Horizon Technology Finance | $96.02 million | 3.24 | -$2.66 million | $0.43 | 10.60 |
| Barings Bdc | $101.66 million | 9.13 | $101.92 million | $0.85 | 10.43 |
Barings Bdc has higher revenue and earnings than Horizon Technology Finance. Barings Bdc is trading at a lower price-to-earnings ratio than Horizon Technology Finance, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent ratings and target prices for Horizon Technology Finance and Barings Bdc, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Horizon Technology Finance | 1 | 5 | 1 | 0 | 2.00 |
| Barings Bdc | 0 | 3 | 1 | 0 | 2.25 |
Horizon Technology Finance presently has a consensus target price of $5.65, indicating a potential upside of 23.90%. Barings Bdc has a consensus target price of $9.50, indicating a potential upside of 7.16%. Given Horizon Technology Finance’s higher probable upside, research analysts clearly believe Horizon Technology Finance is more favorable than Barings Bdc.
Risk and Volatility
Horizon Technology Finance has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Barings Bdc has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.
Insider and Institutional Ownership
4.9% of Horizon Technology Finance shares are owned by institutional investors. Comparatively, 44.1% of Barings Bdc shares are owned by institutional investors. 0.3% of Horizon Technology Finance shares are owned by insiders. Comparatively, 0.6% of Barings Bdc shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.
Profitability
This table compares Horizon Technology Finance and Barings Bdc’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Horizon Technology Finance | 22.55% | 13.63% | 5.53% |
| Barings Bdc | 32.45% | 10.08% | 4.33% |
Summary
Barings Bdc beats Horizon Technology Finance on 10 of the 16 factors compared between the two stocks.
About Horizon Technology Finance
Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, cleantech and sustainability industries. It seeks to invest in companies in the United States.
About Barings Bdc
Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.
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