Reviewing Oxford Square Capital (NASDAQ:OXSQ) & Medallion Financial (NASDAQ:MFIN)

Medallion Financial (NASDAQ:MFIN) and Oxford Square Capital (NASDAQ:OXSQ) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, risk, earnings, dividends, valuation, analyst recommendations and institutional ownership.

Institutional and Insider Ownership

40.6% of Medallion Financial shares are held by institutional investors. Comparatively, 6.4% of Oxford Square Capital shares are held by institutional investors. 24.6% of Medallion Financial shares are held by insiders. Comparatively, 8.6% of Oxford Square Capital shares are held 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 Ratings

This is a summary of recent recommendations and price targets for Medallion Financial and Oxford Square Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medallion Financial	1	0	2	0	2.33
Oxford Square Capital	1	0	0	0	1.00

Medallion Financial presently has a consensus target price of $12.00, suggesting a potential upside of 42.01%. Given Medallion Financial’s stronger consensus rating and higher possible upside, research analysts clearly believe Medallion Financial is more favorable than Oxford Square Capital.

Dividends

Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 5.7%. Oxford Square Capital pays an annual dividend of $0.42 per share and has a dividend yield of 23.7%. Medallion Financial pays out 27.0% of its earnings in the form of a dividend. Oxford Square Capital pays out -161.5% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Oxford Square Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Medallion Financial and Oxford Square Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medallion Financial	$353.31 million	0.56	$43.04 million	$1.78	4.75
Oxford Square Capital	-$14.25 million	-10.87	-$18.73 million	($0.26)	-6.81

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

Risk & Volatility

Medallion Financial has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Oxford Square Capital has a beta of 0.53, meaning that its share price is 47% less volatile than the S&P 500.

Profitability

This table compares Medallion Financial and Oxford Square Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Medallion Financial	12.18%	9.38%	1.61%
Oxford Square Capital	-46.44%	14.80%	7.65%

Summary

Medallion Financial beats Oxford Square Capital on 12 of the 16 factors compared between the two stocks.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.

About Oxford Square Capital

Oxford Square Capital Corp. is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.