Altaba (NASDAQ: AABA) and Solar Senior Capital (NASDAQ:SUNS) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, profitability, earnings, institutional ownership, risk, analyst recommendations and valuation.
Earnings and Valuation
This table compares Altaba and Solar Senior Capital’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Altaba||$5.17 billion||12.04||-$214.32 million||($0.02)||-3,560.72|
|Solar Senior Capital||$27.20 million||10.73||$24.25 million||$1.44||12.64|
This table compares Altaba and Solar Senior Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Solar Senior Capital||76.43%||8.39%||4.48%|
Institutional & Insider Ownership
79.9% of Altaba shares are held by institutional investors. Comparatively, 30.2% of Solar Senior Capital shares are held by institutional investors. 24.0% of Altaba shares are held by company insiders. Comparatively, 5.6% of Solar Senior Capital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 7.7%. Altaba does not pay a dividend. Solar Senior Capital pays out 97.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Volatility & Risk
Altaba has a beta of 1.87, suggesting that its stock price is 87% more volatile than the S&P 500. Comparatively, Solar Senior Capital has a beta of 0.63, suggesting that its stock price is 37% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Altaba and Solar Senior Capital, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Solar Senior Capital||0||0||1||0||3.00|
Altaba presently has a consensus price target of $51.69, suggesting a potential downside of 27.46%. Solar Senior Capital has a consensus price target of $18.50, suggesting a potential upside of 1.65%. Given Solar Senior Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Solar Senior Capital is more favorable than Altaba.
Altaba Inc. (the Fund), formerly Yahoo! Inc., is a non-diversified, closed-end management investment company. The Fund seeks to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns. Alibaba Shares represent an approximate 15% equity interest in Alibaba Group Holding Limited (Alibaba), and its Yahoo Japan Corporation ((Yahoo Japa) Shares represent an approximate 36% equity interest in Yahoo Japan. In addition to the Alibaba Shares and the Yahoo Japan Shares, the Fund also owns the minority investments, all of the equity interests in Excalibur IP, LLC (which owns the Excalibur IP Assets) and the marketable debt securities portfolio. The Fund’s external investment advisors are BlackRock Advisors, LLC and Morgan Stanley Smith Barney LLC.
About Solar Senior Capital
Solar Senior Capital Ltd. is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to seek to maximize current income consistent with the preservation of capital. The Company seeks to achieve its investment objective by directly and indirectly investing in senior loans, including first lien, unitranche, and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which it refers to collectively as senior loans. It may also invest in debt of public companies that are thinly traded or in equity securities. Under normal market conditions, at least 80% of the value of its net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. It invests in privately held the United States middle-market companies. Its investment activities are managed by Solar Capital Partners, LLC (Solar Capital Partners or the Investment Advisor).
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