NewStar Financial (NASDAQ: NEWS) and Banco Latinoamericano de Comercio Exterior, (NYSE:BLX) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, profitability, earnings, risk, dividends, valuation and analyst recommendations.

Dividends

NewStar Financial pays an annual dividend of $0.08 per share and has a dividend yield of 0.8%. Banco Latinoamericano de Comercio Exterior, pays an annual dividend of $1.54 per share and has a dividend yield of 6.0%. NewStar Financial pays out 14.5% of its earnings in the form of a dividend. Banco Latinoamericano de Comercio Exterior, pays out 73.7% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Valuation & Earnings

This table compares NewStar Financial and Banco Latinoamericano de Comercio Exterior,’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
NewStar Financial $95.31 million 4.53 $22.67 million $0.55 19.04
Banco Latinoamericano de Comercio Exterior, $127.99 million 7.88 $82.26 million $2.09 12.26

Banco Latinoamericano de Comercio Exterior, has higher revenue and earnings than NewStar Financial. Banco Latinoamericano de Comercio Exterior, is trading at a lower price-to-earnings ratio than NewStar Financial, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of current recommendations and price targets for NewStar Financial and Banco Latinoamericano de Comercio Exterior,, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
NewStar Financial 0 1 0 0 2.00
Banco Latinoamericano de Comercio Exterior, 1 2 0 0 1.67

NewStar Financial currently has a consensus price target of $11.00, indicating a potential upside of 5.06%. Banco Latinoamericano de Comercio Exterior, has a consensus price target of $27.50, indicating a potential upside of 7.30%. Given Banco Latinoamericano de Comercio Exterior,’s higher possible upside, analysts clearly believe Banco Latinoamericano de Comercio Exterior, is more favorable than NewStar Financial.

Profitability

This table compares NewStar Financial and Banco Latinoamericano de Comercio Exterior,’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
NewStar Financial 8.65% 3.76% 0.60%
Banco Latinoamericano de Comercio Exterior, 31.94% 8.09% 1.18%

Insider and Institutional Ownership

73.7% of NewStar Financial shares are owned by institutional investors. Comparatively, 16.1% of Banco Latinoamericano de Comercio Exterior, shares are owned by institutional investors. 8.1% of NewStar Financial shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Risk and Volatility

NewStar Financial has a beta of 2.03, indicating that its stock price is 103% more volatile than the S&P 500. Comparatively, Banco Latinoamericano de Comercio Exterior, has a beta of 1.61, indicating that its stock price is 61% more volatile than the S&P 500.

Summary

Banco Latinoamericano de Comercio Exterior, beats NewStar Financial on 9 of the 15 factors compared between the two stocks.

NewStar Financial Company Profile

NewStar Financial, Inc. (NewStar) is a commercial finance company. The Company operates through two segments: Commercial Lending and Asset Management. The Commercial Lending segment represents its direct lending activities, which are focused on providing a range of flexible senior secured debt options to mid-sized companies. The Asset Management segment represents its investment advisory activities, which are focused on providing opportunities for qualified investors to invest in a range of credit funds managed by the Company. The Company’s direct lending activities are focused on meeting the financial needs of companies and private investors in the middle market by offering a range of debt financing options. Through its asset management platforms, NewStar offers a range of investment products employing credit-oriented strategies focused on middle market loans and liquid, tradeable credit.

Banco Latinoamericano de Comercio Exterior, Company Profile

Banco Latinoamericano de Comercio Exterior, S.A. (the Bank) is a specialized multinational bank. The Bank is established to support the financing of trade and economic integration in Latin America and the Caribbean. The Company operates in two segments: Commercial and Treasury. The Bank’s Commercial segment incorporates all of the Bank’s financial intermediation and fees generated by the commercial portfolio activities, such as origination of bilateral and syndicated credits, short- and medium-term loans, acceptances and contingent credits. The Bank’s Treasury segment incorporates deposits in banks and all of the Bank’s trading assets, securities available-for-sale and held-to-maturity, and the balance of the investment funds. The Bank serves a range of sectors, including oil and gas, agribusiness, food processing and manufacturing. Its products and services are categorized into three main areas: Financial Intermediation Business, Structuring and Syndications Business and Treasury.

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