Contrasting Cannae (NYSE:CNNE) & Great Elm Capital Group (NASDAQ:GECC)

Cannae (NYSE:CNNE) and Great Elm Capital Group (NASDAQ:GECC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their dividends, analyst recommendations, risk, institutional ownership, earnings, valuation and profitability.

Insider and Institutional Ownership

88.1% of Cannae shares are owned by institutional investors. Comparatively, 38.8% of Great Elm Capital Group shares are owned by institutional investors. 10.9% of Cannae shares are owned by insiders. Comparatively, 8.7% of Great Elm Capital Group shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent recommendations for Cannae and Great Elm Capital Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cannae	1	1	2	0	2.25
Great Elm Capital Group	1	2	0	0	1.67

Cannae currently has a consensus target price of $20.50, suggesting a potential upside of 31.04%. Great Elm Capital Group has a consensus target price of $10.50, suggesting a potential upside of 47.89%. Given Great Elm Capital Group’s higher probable upside, analysts plainly believe Great Elm Capital Group is more favorable than Cannae.

Dividends

Cannae pays an annual dividend of $0.60 per share and has a dividend yield of 3.8%. Great Elm Capital Group pays an annual dividend of $1.48 per share and has a dividend yield of 20.8%. Cannae pays out -7.8% of its earnings in the form of a dividend. Great Elm Capital Group pays out -264.3% 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. Great Elm Capital Group has increased its dividend for 2 consecutive years. Great Elm Capital Group is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk & Volatility

Cannae has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500. Comparatively, Great Elm Capital Group has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500.

Earnings and Valuation

This table compares Cannae and Great Elm Capital Group”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cannae	$452.50 million	1.70	-$304.60 million	($7.73)	-2.02
Great Elm Capital Group	$39.32 million	2.53	$3.55 million	($0.56)	-12.68

Great Elm Capital Group has lower revenue, but higher earnings than Cannae. Great Elm Capital Group is trading at a lower price-to-earnings ratio than Cannae, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cannae and Great Elm Capital Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cannae	-108.39%	-23.16%	-18.38%
Great Elm Capital Group	-17.08%	10.97%	3.95%

Summary

Great Elm Capital Group beats Cannae on 10 of the 17 factors compared between the two stocks.

About Cannae

Cannae Holdings, Inc. is a principal investment firm. The firm primarily invests in restaurants, technology enabled healthcare services, financial services and more. It takes both minority and majority stakes. Cannae Holdings, Inc. was founded in 2014 and is based in Las Vegas, Nevada.

About Great Elm Capital Group

Great Elm Capital Corp. is a business development company which specializes in loan and mezzanine, middle market investments. It invests in the debt instruments of middle market companies. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.