PennantPark Floating Rate Capital (NASDAQ: PFLT) and Invesco California Value Municipal Income Trust (NYSE:VCV) are both finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, risk, profitability, valuation and earnings.

Insider & Institutional Ownership

34.0% of PennantPark Floating Rate Capital shares are held by institutional investors. Comparatively, 11.6% of Invesco California Value Municipal Income Trust shares are held by institutional investors. 1.2% of PennantPark Floating Rate Capital shares are held by company insiders. Comparatively, 1.0% of Invesco California Value Municipal Income Trust shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares PennantPark Floating Rate Capital and Invesco California Value Municipal Income Trust’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PennantPark Floating Rate Capital N/A N/A N/A $1.46 9.71
Invesco California Value Municipal Income Trust N/A N/A N/A N/A N/A

Profitability

This table compares PennantPark Floating Rate Capital and Invesco California Value Municipal Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PennantPark Floating Rate Capital 73.28% 7.26% 4.15%
Invesco California Value Municipal Income Trust N/A N/A N/A

Risk & Volatility

PennantPark Floating Rate Capital has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Invesco California Value Municipal Income Trust has a beta of -0.1, suggesting that its share price is 110% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations and price targets for PennantPark Floating Rate Capital and Invesco California Value Municipal Income Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PennantPark Floating Rate Capital 0 1 4 0 2.80
Invesco California Value Municipal Income Trust 0 0 0 0 N/A

PennantPark Floating Rate Capital presently has a consensus target price of $14.80, suggesting a potential upside of 4.37%. Given PennantPark Floating Rate Capital’s higher probable upside, equities analysts clearly believe PennantPark Floating Rate Capital is more favorable than Invesco California Value Municipal Income Trust.

Dividends

PennantPark Floating Rate Capital pays an annual dividend of $1.14 per share and has a dividend yield of 8.0%. Invesco California Value Municipal Income Trust pays an annual dividend of $0.64 per share and has a dividend yield of 4.9%. PennantPark Floating Rate Capital pays out 78.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

PennantPark Floating Rate Capital beats Invesco California Value Municipal Income Trust on 9 of the 10 factors compared between the two stocks.

About PennantPark Floating Rate Capital

PennantPark Floating Rate Capital Ltd. is a business development company. The Company is a closed-end, externally managed and non-diversified investment company. Its investment objectives are to generate current income and capital appreciation by investing primarily in floating rate loans and other investments made to the United States middle-market companies. It provides first lien secured debt and other opportunistic financings (senior notes, second lien, mezzanine, private high yield debt, and preferred and common stock) to middle market sponsors and companies. Its investments may include equity features, such as direct investments in the equity securities of borrowers or warrants or options to buy a minority interest in a portfolio company. It has investments in various sectors, including aerospace and defense; consumer services; healthcare and pharmaceuticals, and others. Its investment activities are managed by the investment advisor, PennantPark Investment Advisers, LLC.

About Invesco California Value Municipal Income Trust

Invesco Van Kampen California Value Municipal Income Trust (the Trust), formerly Invesco California Value Municipal Income Trust, is a diversified, closed-end management investment trust. The Trust’s investment objective is to seek to provide common shareholders with a high level of current income exempt from federal and California income taxes, consistent with preservation of capital. The Trust will invest substantially all of its assets in California municipal securities rated investment grade at the time of investment. The Trust seeks to achieve its investment objective by investing primarily in California municipal securities that are rated investment grade at the time of investment. Municipal securities include municipal bonds, municipal notes, municipal commercial paper and lease obligations. Invesco Advisers, Inc. serves as its investment advisor.

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