WhiteHorse Finance (NASDAQ: WHF) and Hercules Capital (NYSE:HTGC) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Dividends

WhiteHorse Finance pays an annual dividend of $1.42 per share and has a dividend yield of 9.8%. Hercules Capital pays an annual dividend of $1.24 per share and has a dividend yield of 10.2%. WhiteHorse Finance pays out 75.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hercules Capital pays out 134.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares WhiteHorse Finance and Hercules Capital’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
WhiteHorse Finance N/A N/A N/A $1.88 7.68
Hercules Capital $187.39 million 5.35 $140.30 million $0.92 13.16

Hercules Capital has higher revenue and earnings than WhiteHorse Finance. WhiteHorse Finance is trading at a lower price-to-earnings ratio than Hercules Capital, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

WhiteHorse Finance has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Hercules Capital has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for WhiteHorse Finance and Hercules Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
WhiteHorse Finance 0 0 2 0 3.00
Hercules Capital 1 1 4 0 2.50

WhiteHorse Finance currently has a consensus price target of $13.50, indicating a potential downside of 6.51%. Hercules Capital has a consensus price target of $15.08, indicating a potential upside of 24.55%. Given Hercules Capital’s higher possible upside, analysts clearly believe Hercules Capital is more favorable than WhiteHorse Finance.

Profitability

This table compares WhiteHorse Finance and Hercules Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
WhiteHorse Finance 62.57% 10.57% 5.99%
Hercules Capital 38.69% 12.93% 6.76%

Institutional and Insider Ownership

9.6% of WhiteHorse Finance shares are owned by institutional investors. Comparatively, 44.6% of Hercules Capital shares are owned by institutional investors. 1.4% of WhiteHorse Finance shares are owned by company insiders. Comparatively, 3.9% of Hercules Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Hercules Capital beats WhiteHorse Finance on 9 of the 13 factors compared between the two stocks.

WhiteHorse Finance Company Profile

WhiteHorse Finance, Inc. is a non-diversified, closed-end management investment company. The Company is a direct lender targeting debt investments in privately held, small-cap companies located in the United States. The Company’s investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing small-cap companies across a range of industries that typically carry a floating interest rate based on the London Interbank Offered Rate (LIBOR) and have a term of 3 to 6 years. The Company may also make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. The Company also may receive warrants to purchase common stock in connection with its debt investments. Its investment advisor is H.I.G. WhiteHorse Advisers, LLC.

Hercules Capital Company Profile

Hercules Capital, Inc. is a specialty finance company. The Company is an internally managed, non-diversified, closed-end investment company. The Company focuses on providing senior secured venture growth loans to venture capital-backed companies in a range of technology, life sciences, and sustainable and renewable technology industries. The Company’s investment objective is to maximize its portfolio total return by generating current income from its debt investments and capital appreciation from its warrant and equity-related investments. The Company’s primary business objectives are to increase its net income, net operating income and net asset value (NAV) by investing in structured debt with warrants and equity of venture capital-backed companies in technology-related industries with attractive current yields and the potential for equity appreciation and realized gains. The Company focuses its investments in companies active in the technology industry sub-sectors.

Receive News & Ratings for WhiteHorse Finance Inc. Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for WhiteHorse Finance Inc. and related companies with MarketBeat.com's FREE daily email newsletter.