Comparing Oaktree Capital Group (NYSE:OAK) and Garrison Capital (GARS)
Oaktree Capital Group (NYSE: OAK) and Garrison Capital (NASDAQ:GARS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, analyst recommendations, earnings, risk, profitabiliy, valuation and institutional ownership.
This table compares Oaktree Capital Group and Garrison Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Oaktree Capital Group||19.08%||17.74%||4.43%|
Risk and Volatility
Oaktree Capital Group has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Garrison Capital has a beta of 0.25, indicating that its stock price is 75% less volatile than the S&P 500.
This is a breakdown of recent ratings and price targets for Oaktree Capital Group and Garrison Capital, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Oaktree Capital Group||1||4||2||0||2.14|
Oaktree Capital Group presently has a consensus target price of $47.80, suggesting a potential upside of 1.16%. Garrison Capital has a consensus target price of $10.13, suggesting a potential upside of 24.85%. Given Garrison Capital’s higher probable upside, analysts plainly believe Garrison Capital is more favorable than Oaktree Capital Group.
Oaktree Capital Group pays an annual dividend of $2.84 per share and has a dividend yield of 6.0%. Garrison Capital pays an annual dividend of $1.12 per share and has a dividend yield of 13.8%. Oaktree Capital Group pays out 80.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Garrison Capital pays out -302.7% of its earnings in the form of a dividend. Garrison Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Earnings and Valuation
This table compares Oaktree Capital Group and Garrison Capital’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Oaktree Capital Group||$1.16 billion||2.62||$376.32 million||$3.52||13.42|
Oaktree Capital Group has higher revenue and earnings than Garrison Capital. Garrison Capital is trading at a lower price-to-earnings ratio than Oaktree Capital Group, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
22.8% of Oaktree Capital Group shares are held by institutional investors. Comparatively, 23.8% of Garrison Capital shares are held by institutional investors. 5.8% of Garrison Capital shares are held 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.
Oaktree Capital Group beats Garrison Capital on 9 of the 14 factors compared between the two stocks.
About Oaktree Capital Group
Oaktree Capital Group, LLC (Oaktree) is an investment manager specializing in alternative investments. The Company operates through investment management segment, which consists of the investment management services that the Company provides to its clients. The Company manages investments in a range of strategies within approximately six asset classes, which include corporate debt, convertible securities, distressed debt, control investing, real estate and listed equities. The Funds managed by Oaktree include commingled funds, separate accounts and collateralized loan obligation vehicles (CLOs). The commingled funds include open-end and closed-end limited partnerships in which it makes an investment and for which it serves as the general partner. CLOs are structured finance vehicles in which the Company typically makes an investment and for which it serves as collateral manager. Its clientele includes the United States pension plans and corporations and/or their pension funds.
About Garrison Capital
Garrison Capital Inc. is a managed, closed-end, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation by making investments primarily in debt securities and loans of the United States-based middle-market companies, which it defines as those having annual earnings before interest, taxes and depreciation, or EBITDA, of certain amount. It invests or provides direct lending in first lien senior secured loans, second lien senior secured loans, one-stop senior secured loans or unitranche loans, subordinated or mezzanine loans, unsecured consumer loans and to a lesser extent, selected equity co-investments in middle-market companies. The Company intends to generate risk-adjusted net returns by assembling a portfolio of investments. The Company’s investment advisor is Garrison Capital Advisers LLC.
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