Cannae (NYSE: CNNE) and Saratoga Investment (NYSE:SAR) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their dividends, earnings, risk, institutional ownership, profitability, analyst recommendations and valuation.
Earnings and Valuation
This table compares Cannae and Saratoga Investment’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Cannae||$1.34 billion||0.90||$650.00 million||$1.62||10.46|
|Saratoga Investment||$33.16 million||3.83||$11.38 million||$2.25||9.02|
This is a summary of current ratings and price targets for Cannae and Saratoga Investment, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Saratoga Investment has a consensus target price of $24.00, suggesting a potential upside of 18.23%. Given Saratoga Investment’s higher possible upside, analysts plainly believe Saratoga Investment is more favorable than Cannae.
This table compares Cannae and Saratoga Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Saratoga Investment pays an annual dividend of $1.96 per share and has a dividend yield of 9.7%. Cannae does not pay a dividend. Saratoga Investment pays out 87.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cannae has raised its dividend for 2 consecutive years.
Risk & Volatility
Cannae has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.26, indicating that its share price is 74% less volatile than the S&P 500.
Insider and Institutional Ownership
70.9% of Cannae shares are owned by institutional investors. Comparatively, 16.7% of Saratoga Investment shares are owned by institutional investors. 6.0% of Cannae shares are owned by company insiders. Comparatively, 32.0% of Saratoga Investment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Saratoga Investment beats Cannae on 9 of the 16 factors compared between the two stocks.
Cannae Holdings, Inc. is a diversified holding company. The Company has investments in a variety of industries including Restaurants, Technology Enabled Healthcare Services, Financial Services and more. The Company holds majority and minority equity investment stakes in a number of entities, including Ceridian Holdings, LLC, American Blue Ribbon Holdings, and LLC and T-System Holding LLC.
About Saratoga Investment
Saratoga Investment Corp. is a specialty finance company. The Company is an externally managed, closed-end, non-diversified management investment company. The Company invests primarily in leveraged loans and mezzanine debt issued by private middle-market companies in the United States. Its investment objective is to generate current income and, to a lesser extent, capital appreciation from its investments. It purchases mezzanine debt and makes equity investments in middle market companies. It may invest in other investments, such as investments in distressed debt, including securities of companies in bankruptcy, foreign debt, private equity, securities of public companies that are not thinly traded and structured finance vehicles, such as collateralized loan obligation funds. Its leveraged loan portfolio consists primarily of first lien and second lien term loans. The Company’s investment activities are externally managed and advised by Saratoga Investment Advisors, LLC.
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