Solar Senior Capital (NASDAQ: SUNS) and Kayne Anderson Energy Development (NYSE:KED) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, earnings, valuation, institutional ownership, risk and dividends.
Volatility and Risk
Solar Senior Capital has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, Kayne Anderson Energy Development has a beta of 1.2, suggesting that its share price is 20% more volatile than the S&P 500.
Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 8.4%. Kayne Anderson Energy Development pays an annual dividend of $1.60 per share and has a dividend yield of 9.5%. 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. Kayne Anderson Energy Development pays out -2,285.7% of its earnings in the form of a dividend. Kayne Anderson Energy Development is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Solar Senior Capital and Kayne Anderson Energy Development’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%|
|Kayne Anderson Energy Development||-2,475.00%||-13.79%||-8.15%|
Earnings & Valuation
This table compares Solar Senior Capital and Kayne Anderson Energy Development’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Solar Senior Capital||$27.20 million||9.94||$24.25 million||$1.44||11.71|
|Kayne Anderson Energy Development||N/A||N/A||N/A||($0.07)||-240.00|
Solar Senior Capital has higher revenue and earnings than Kayne Anderson Energy Development. Kayne Anderson Energy Development is trading at a lower price-to-earnings ratio than Solar Senior Capital, indicating that it is currently the more affordable of the two stocks.
Insider & Institutional Ownership
29.8% of Solar Senior Capital shares are held by institutional investors. 5.6% of Solar Senior Capital shares are held 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.
This is a summary of current recommendations and price targets for Solar Senior Capital and Kayne Anderson Energy Development, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Solar Senior Capital||0||0||1||0||3.00|
|Kayne Anderson Energy Development||0||0||1||0||3.00|
Solar Senior Capital presently has a consensus target price of $18.50, suggesting a potential upside of 9.73%. Kayne Anderson Energy Development has a consensus target price of $20.00, suggesting a potential upside of 19.05%. Given Kayne Anderson Energy Development’s higher probable upside, analysts clearly believe Kayne Anderson Energy Development is more favorable than Solar Senior Capital.
Solar Senior Capital beats Kayne Anderson Energy Development on 8 of the 12 factors compared between the two stocks.
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).
About Kayne Anderson Energy Development
Kayne Anderson Energy Development Company is a non-diversified, closed-end fund. The Fund’s investment objective is to generate both current income and capital appreciation, through equity and debt investments. It seeks to achieve this objective by investing approximately 80% of its total assets in securities of companies that derive their revenue from activities in the energy industry, including midstream energy companies, which operates assets used to gather, transport, process, treat, terminal and store natural gas, natural gas liquids, crude oil or refined petroleum products; upstream energy companies, which are engaged in the exploration, extraction and production of natural resources, including natural gas, natural gas liquids and crude oil, from onshore and offshore geological reservoirs, and other energy companies, which are engaged in owning, leasing, managing, producing, processing and selling of coal and coal reserves. KA Fund Advisors, LLC is the advisor of the Fund.
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