Horizon Technology Finance (NASDAQ:HRZN – Get Free Report) and Rand Capital (NASDAQ:RAND – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitability, dividends, analyst recommendations, earnings, institutional ownership, risk and valuation.
Profitability
This table compares Horizon Technology Finance and Rand Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Horizon Technology Finance | 22.55% | 13.63% | 5.53% |
| Rand Capital | -162.06% | 5.87% | 5.75% |
Analyst Recommendations
This is a summary of current ratings and price targets for Horizon Technology Finance and Rand Capital, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Horizon Technology Finance | 1 | 5 | 1 | 0 | 2.00 |
| Rand Capital | 1 | 0 | 0 | 0 | 1.00 |
Institutional & Insider Ownership
4.9% of Horizon Technology Finance shares are held by institutional investors. 0.3% of Horizon Technology Finance shares are held by company insiders. Comparatively, 68.2% of Rand Capital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Risk & Volatility
Horizon Technology Finance has a beta of 1, indicating that its stock price has a similar volatility profile to the S&P 500.Comparatively, Rand Capital has a beta of 0.08, indicating that its stock price is 92% less volatile than the S&P 500.
Valuation & Earnings
This table compares Horizon Technology Finance and Rand Capital”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Horizon Technology Finance | $96.02 million | 3.14 | -$2.66 million | $0.43 | 10.26 |
| Rand Capital | $6.47 million | 4.72 | -$8.04 million | ($3.10) | -3.32 |
Horizon Technology Finance has higher revenue and earnings than Rand Capital. Rand Capital is trading at a lower price-to-earnings ratio than Horizon Technology Finance, indicating that it is currently the more affordable of the two stocks.
Dividends
Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 16.3%. Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 11.3%. Horizon Technology Finance pays out 167.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rand Capital pays out -37.4% of its earnings in the form of a dividend.
Summary
Horizon Technology Finance beats Rand Capital on 12 of the 16 factors compared between the two stocks.
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 Rand Capital
Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.
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