Analyzing TriplePoint Venture Growth BDC (NYSE:TPVG) & Horizon Technology Finance (NASDAQ:HRZN)

Horizon Technology Finance (NASDAQ:HRZN) and TriplePoint Venture Growth BDC (NYSE:TPVG) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, valuation and risk.

Insider & Institutional Ownership

4.9% of Horizon Technology Finance shares are owned by institutional investors. Comparatively, 12.8% of TriplePoint Venture Growth BDC shares are owned by institutional investors. 1.3% of Horizon Technology Finance shares are owned by insiders. Comparatively, 1.5% of TriplePoint Venture Growth BDC shares are owned by 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.

Analyst Recommendations

This is a summary of recent recommendations for Horizon Technology Finance and TriplePoint Venture Growth BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Technology Finance	3	2	1	0	1.67
TriplePoint Venture Growth BDC	3	4	0	0	1.57

Horizon Technology Finance currently has a consensus price target of $7.00, suggesting a potential upside of 4.63%. TriplePoint Venture Growth BDC has a consensus price target of $6.25, suggesting a potential downside of 7.27%. Given Horizon Technology Finance’s stronger consensus rating and higher probable upside, analysts clearly believe Horizon Technology Finance is more favorable than TriplePoint Venture Growth BDC.

Profitability

This table compares Horizon Technology Finance and TriplePoint Venture Growth BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Horizon Technology Finance	-24.19%	15.01%	6.02%
TriplePoint Venture Growth BDC	36.02%	12.88%	5.76%

Valuation and Earnings

This table compares Horizon Technology Finance and TriplePoint Venture Growth BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Horizon Technology Finance	$99.92 million	2.97	-$5.63 million	($0.67)	-9.99
TriplePoint Venture Growth BDC	$108.65 million	2.51	$32.05 million	$0.85	7.93

TriplePoint Venture Growth BDC has higher revenue and earnings than Horizon Technology Finance. Horizon Technology Finance is trading at a lower price-to-earnings ratio than TriplePoint Venture Growth BDC, indicating that it is currently the more affordable of the two stocks.

Dividends

Horizon Technology Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.7%. TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 13.6%. Horizon Technology Finance pays out -197.0% of its earnings in the form of a dividend. TriplePoint Venture Growth BDC pays out 108.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Horizon Technology Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Horizon Technology Finance has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500. Comparatively, TriplePoint Venture Growth BDC has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500.

About Horizon Technology Finance

Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, cleantech and sustainability industries. It seeks to invest in companies in the United States.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.