PennantPark Floating Rate (NASDAQ: PFLT) and Safeguard Scientifics (NYSE:SFE) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their institutional ownership, profitability, analyst recommendations, risk, dividends, earnings and valuation.
PennantPark Floating Rate pays an annual dividend of $1.14 per share and has a dividend yield of 8.5%. Safeguard Scientifics does not pay a dividend. PennantPark Floating Rate pays out 103.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This table compares PennantPark Floating Rate and Safeguard Scientifics’ top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|PennantPark Floating Rate||$59.50 million||8.74||$36.32 million||$1.10||12.19|
|Safeguard Scientifics||N/A||N/A||-$88.57 million||($4.34)||-2.88|
PennantPark Floating Rate has higher revenue and earnings than Safeguard Scientifics. Safeguard Scientifics is trading at a lower price-to-earnings ratio than PennantPark Floating Rate, indicating that it is currently the more affordable of the two stocks.
This is a summary of current ratings and target prices for PennantPark Floating Rate and Safeguard Scientifics, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PennantPark Floating Rate||0||0||3||0||3.00|
PennantPark Floating Rate currently has a consensus price target of $14.58, indicating a potential upside of 8.75%. Safeguard Scientifics has a consensus price target of $17.25, indicating a potential upside of 38.00%. Given Safeguard Scientifics’ higher probable upside, analysts clearly believe Safeguard Scientifics is more favorable than PennantPark Floating Rate.
Insider & Institutional Ownership
31.6% of PennantPark Floating Rate shares are held by institutional investors. Comparatively, 76.1% of Safeguard Scientifics shares are held by institutional investors. 1.0% of PennantPark Floating Rate shares are held by insiders. Comparatively, 2.7% of Safeguard Scientifics shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This table compares PennantPark Floating Rate and Safeguard Scientifics’ net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PennantPark Floating Rate||47.64%||7.49%||4.48%|
Risk and Volatility
PennantPark Floating Rate has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Safeguard Scientifics has a beta of 1.27, suggesting that its stock price is 27% more volatile than the S&P 500.
PennantPark Floating Rate beats Safeguard Scientifics on 9 of the 14 factors compared between the two stocks.
PennantPark Floating Rate Company Profile
PennantPark Floating Rate Capital Ltd. is a business development company. The Company is a closed-end, externally managed and non-diversified investment company. Its investment objectives are to generate current income and capital appreciation by investing primarily in floating rate loans and other investments made to the United States middle-market companies. It provides first lien secured debt and other opportunistic financings (senior notes, second lien, mezzanine, private high yield debt, and preferred and common stock) to middle market sponsors and companies. Its investments may include equity features, such as direct investments in the equity securities of borrowers or warrants or options to buy a minority interest in a portfolio company. It has investments in various sectors, including aerospace and defense; consumer services; healthcare and pharmaceuticals, and others. Its investment activities are managed by the investment advisor, PennantPark Investment Advisers, LLC.
Safeguard Scientifics Company Profile
Safeguard Scientifics, Inc. no longer investing. It is a private equity and venture capital firm specializing in expansion financings, growth capital, management buyouts, recapitalizations, industry consolidations, corporate spinouts, growth stage, and early stage financings in Fintech sector. It initially invests in a Series A-C round and opportunistically in a seed round. The firm prefers to make investments in companies engaged in the technology, financial services, and healthcare sector. Within the technology sector, it invests in software as a service, adtech / digital media, Internet of Everything, enhanced security, predictive analytics, machine learning, artificial intelligence, enterprise software, technology enabled services, internet/new media, financial technology, cloud, mobile, social, big data, in memory, and selected business services with capital requirements of up to $25 million. Within healthcare sector, the firm invests in molecular and point-of-care diagnostics, medical devices, regenerative medicine, medical technology, digital health, healthcare technology, specialty pharmaceuticals, and selected healthcare services. It invests throughout the United States with a focus on Mid-Atlantic region, and Southeastern Canada. The firm primarily invests between $5 million and $25 million in growth equity financing and between $5 million and $10 million in early-stage financing. It typically invests in the capital structures including owner financed and bootstrapped companies, corporate division or business unit, and venture capital-backed seeking a growth partner. The firm prefers to be the largest shareholder in its portfolio companies, with ownership in the range of 20 percent to 50 percent. However, it may occasionally take a majority or smaller stake in its portfolio companies. It prefers to invest in companies having proprietary technology and intellectual property. The firm prefers to take a Board seat in its portfolio companies. The company was founded in 1953 as Lancaster Corporation and changed its name to Safeguard Scientifics, Inc. in 1981. Safeguard Scientifics, Inc. is based in Radnor, Pennsylvania with an additional office in Weston, Massachusetts.
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