Contrasting Alcentra Capital (ABDC) and Ameriprise Financial (AMP)

Alcentra Capital (NASDAQ:ABDC) and Ameriprise Financial (NYSE:AMP) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, risk, analyst recommendations, earnings, valuation, profitability and institutional ownership.

Institutional and Insider Ownership

32.7% of Alcentra Capital shares are held by institutional investors. Comparatively, 81.7% of Ameriprise Financial shares are held by institutional investors. 0.6% of Alcentra Capital shares are held by company insiders. Comparatively, 1.5% of Ameriprise Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Volatility & Risk

Alcentra Capital has a beta of 0.59, indicating that its stock price is 41% less volatile than the S&P 500. Comparatively, Ameriprise Financial has a beta of 1.79, indicating that its stock price is 79% more volatile than the S&P 500.

Dividends

Alcentra Capital pays an annual dividend of $0.72 per share and has a dividend yield of 11.1%. Ameriprise Financial pays an annual dividend of $3.60 per share and has a dividend yield of 2.8%. Alcentra Capital pays out 54.5% of its earnings in the form of a dividend. Ameriprise Financial pays out 29.3% 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. Ameriprise Financial has raised its dividend for 8 consecutive years.

Profitability

This table compares Alcentra Capital and Ameriprise Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alcentra Capital -29.76% 9.29% 5.02%
Ameriprise Financial 13.58% 37.21% 1.48%

Analyst Ratings

This is a breakdown of current ratings and price targets for Alcentra Capital and Ameriprise Financial, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alcentra Capital 0 3 0 0 2.00
Ameriprise Financial 0 5 3 0 2.38

Alcentra Capital currently has a consensus target price of $7.00, indicating a potential upside of 7.69%. Ameriprise Financial has a consensus target price of $160.14, indicating a potential upside of 25.44%. Given Ameriprise Financial’s stronger consensus rating and higher probable upside, analysts plainly believe Ameriprise Financial is more favorable than Alcentra Capital.

Valuation & Earnings

This table compares Alcentra Capital and Ameriprise Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alcentra Capital $33.35 million 2.64 -$19.10 million $1.32 4.92
Ameriprise Financial $12.03 billion 1.48 $1.48 billion $12.27 10.40

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

Summary

Ameriprise Financial beats Alcentra Capital on 14 of the 17 factors compared between the two stocks.

Alcentra Capital Company Profile

Alcentra Capital Corporation is a business development company specializing in investments in lower middle-market companies. The fund seeks to invest in healthcare, business services, defense, government services, telecom and technology, media, infrastructure maintenance and logistics, and oil and gas services sector. It focuses on investment opportunities headquartered in the United States. The fund seeks to invest $5 million to $15 million per transaction in companies with EBITDA between $5 million to $15 million and revenues of between $10 million and $100 million. It invests in the form of subordinated debt and, to a lesser extent, senior debt and minority equity investments.

Ameriprise Financial Company Profile

Ameriprise Financial, Inc., through its subsidiaries, provides various financial products and services to individual and institutional clients in the United States and internationally. It operates through Advice & Wealth Management, Asset Management, Annuities, and Protection segments. The Advice & Wealth Management segment provides financial planning and advice, as well as full-service brokerage services primarily to retail clients through its advisors. The Asset Management segment offers investment management and advice, and investment products to retail, high net worth, and institutional clients through unaffiliated third party financial institutions and institutional sales force. This segment's products include U.S. mutual funds and their non-U.S. equivalents, exchange-traded funds, variable product funds underlying insurance, and annuity separate accounts; and institutional asset management products, such as traditional asset classes, separately managed accounts, individually managed accounts, collateralized loan obligations, hedge funds, collective funds, and property funds. The Annuities segment provides variable and fixed annuity products to individual clients through affiliated and unaffiliated advisors, and financial institutions. The Protection segment offers various products to address the protection and risk management needs of retail clients, including life, disability income, and property casualty insurance through advisors and affinity relationships. The company was formerly known as American Express Financial Corporation and changed its name to Ameriprise Financial, Inc. in September 2005. Ameriprise Financial, Inc. was founded in 1894 and is headquartered in Minneapolis, Minnesota.

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