Garrison Capital (NASDAQ: GARS) and Franklin Resources (NYSE:BEN) are both investment management & fund operators – nec companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, analyst recommendations, earnings, institutional ownership and risk.

Earnings & Valuation

This table compares Garrison Capital and Franklin Resources’ top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Garrison Capital $42.95 million 3.08 -$4.80 million $0.33 25.00
Franklin Resources $6.39 billion 3.54 $1.70 billion $3.00 13.61

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

Profitability

This table compares Garrison Capital and Franklin Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Garrison Capital 14.66% 9.33% 4.49%
Franklin Resources 26.54% 13.60% 10.00%

Volatility and Risk

Garrison Capital has a beta of 0.24, meaning that its stock price is 76% less volatile than the S&P 500. Comparatively, Franklin Resources has a beta of 1.75, meaning that its stock price is 75% more volatile than the S&P 500.

Dividends

Garrison Capital pays an annual dividend of $1.12 per share and has a dividend yield of 13.6%. Franklin Resources pays an annual dividend of $0.80 per share and has a dividend yield of 2.0%. Garrison Capital pays out 339.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Resources pays out 26.7% of its earnings in the form of a dividend. Franklin Resources has raised its dividend for 35 consecutive years.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Garrison Capital and Franklin Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Garrison Capital 0 5 1 0 2.17
Franklin Resources 3 6 1 0 1.80

Garrison Capital currently has a consensus target price of $10.33, suggesting a potential upside of 25.25%. Franklin Resources has a consensus target price of $43.44, suggesting a potential upside of 6.40%. Given Garrison Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Garrison Capital is more favorable than Franklin Resources.

Institutional & Insider Ownership

20.9% of Garrison Capital shares are owned by institutional investors. Comparatively, 46.0% of Franklin Resources shares are owned by institutional investors. 5.8% of Garrison Capital shares are owned by insiders. Comparatively, 21.6% of Franklin Resources shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

Franklin Resources beats Garrison Capital on 13 of the 16 factors compared between the two stocks.

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.

About Franklin Resources

Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.

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