Analyzing WhiteHorse Finance (WHF) and OFS Capital Corporation (OFS)
WhiteHorse Finance (NASDAQ: WHF) and OFS Capital Corporation (NASDAQ:OFS) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their analyst recommendations, earnings, risk, valuation, profitability, institutional ownership and dividends.
Risk and Volatility
WhiteHorse Finance has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500. Comparatively, OFS Capital Corporation has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500.
Valuation and Earnings
This table compares WhiteHorse Finance and OFS Capital Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|OFS Capital Corporation||N/A||N/A||N/A||$1.08||12.08|
WhiteHorse Finance is trading at a lower price-to-earnings ratio than OFS Capital Corporation, indicating that it is currently the more affordable of the two stocks.
Insider and Institutional Ownership
9.6% of WhiteHorse Finance shares are owned by institutional investors. Comparatively, 28.6% of OFS Capital Corporation shares are owned by institutional investors. 1.4% of WhiteHorse Finance shares are owned by company insiders. Comparatively, 0.0% of OFS Capital Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a summary of recent recommendations and price targets for WhiteHorse Finance and OFS Capital Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|OFS Capital Corporation||1||1||3||0||2.40|
WhiteHorse Finance currently has a consensus price target of $15.00, indicating a potential upside of 2.25%. OFS Capital Corporation has a consensus price target of $14.25, indicating a potential upside of 9.20%. Given OFS Capital Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe OFS Capital Corporation is more favorable than WhiteHorse Finance.
WhiteHorse Finance pays an annual dividend of $1.42 per share and has a dividend yield of 9.7%. OFS Capital Corporation pays an annual dividend of $1.36 per share and has a dividend yield of 10.4%. 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. OFS Capital Corporation pays out 125.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares WhiteHorse Finance and OFS Capital Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|OFS Capital Corporation||31.02%||9.43%||4.69%|
WhiteHorse Finance beats OFS Capital Corporation on 7 of the 12 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.
OFS Capital Corporation Company Profile
OFS Capital Corporation (OFS Capital) is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to provide its shareholders with both current income and capital appreciation primarily through debt investments and equity investments. It focuses primarily on middle-market companies in the United States, including senior secured loans, including first-lien, second-lien and unitranche loans, as well as subordinated loans, and warrants and other minority equity securities. The Company may make investments directly or through OFS SBIC I, LP (SBIC I LP), its investment company subsidiary. It focuses on investments in loans, in which OFS Advisor’s investment professionals have expertise, including investments in first-lien, unitranche, second-lien, and mezzanine loans and, to a lesser extent, on warrants and other equity securities. The Company’s investment activities are managed by OFS Capital Management, LLC (OFS Advisor).
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