Horizon Technology Finance Corporation (HRZN) & PennantPark Investment Corporation (PNNT) Financial Survey

Horizon Technology Finance Corporation (NASDAQ: HRZN) and PennantPark Investment Corporation (NASDAQ:PNNT) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, valuation, risk, earnings, profitability, institutional ownership and analyst recommendations.

Analyst Ratings

This is a summary of current ratings for Horizon Technology Finance Corporation and PennantPark Investment Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Horizon Technology Finance Corporation 2 2 1 0 1.80
PennantPark Investment Corporation 0 7 2 0 2.22

Horizon Technology Finance Corporation presently has a consensus target price of $10.75, suggesting a potential upside of 0.94%. PennantPark Investment Corporation has a consensus target price of $8.07, suggesting a potential upside of 6.91%. Given PennantPark Investment Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe PennantPark Investment Corporation is more favorable than Horizon Technology Finance Corporation.

Profitability

This table compares Horizon Technology Finance Corporation and PennantPark Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Horizon Technology Finance Corporation -6.72% 10.24% 6.29%
PennantPark Investment Corporation 53.92% 9.11% 4.72%

Dividends

Horizon Technology Finance Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 11.3%. PennantPark Investment Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 9.5%. Horizon Technology Finance Corporation pays out -750.0% of its earnings in the form of a dividend. PennantPark Investment Corporation pays out 74.2% 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. Horizon Technology Finance Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Horizon Technology Finance Corporation and PennantPark Investment Corporation’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Horizon Technology Finance Corporation N/A N/A N/A ($0.16) -66.56
PennantPark Investment Corporation N/A N/A N/A $0.97 7.78

Horizon Technology Finance Corporation is trading at a lower price-to-earnings ratio than PennantPark Investment Corporation, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

18.1% of Horizon Technology Finance Corporation shares are owned by institutional investors. Comparatively, 42.6% of PennantPark Investment Corporation shares are owned by institutional investors. 1.3% of Horizon Technology Finance Corporation shares are owned by company insiders. Comparatively, 1.9% of PennantPark Investment Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Risk and Volatility

Horizon Technology Finance Corporation has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, PennantPark Investment Corporation has a beta of 1.26, meaning that its share price is 26% more volatile than the S&P 500.

Summary

PennantPark Investment Corporation beats Horizon Technology Finance Corporation on 9 of the 13 factors compared between the two stocks.

About Horizon Technology Finance Corporation

Horizon Technology Finance Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to maximize investment portfolio’s total return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. It lends to and invests in development-stage companies in the technology, life science, healthcare information and services and cleantech industries (collectively Target Industries). It is focused on making secured debt investments (Venture Loans) to venture capital backed companies in its Target Industries. As of December 31, 2016, its debt investment portfolio consisted of 44 debt investments. As of December 31, 2016, the Company held warrants to purchase stock, predominantly preferred stock, in 78 portfolio companies, equity positions in five portfolio companies and success fee arrangements in 11 portfolio companies.

About PennantPark Investment Corporation

PennantPark Investment Corporation is a closed-end, non-diversified investment company. The Company is a business development company. Its objectives are to generate both current income and capital appreciation while seeking to preserve capital through debt and equity investments primarily made to the United States middle-market companies in the form of senior secured debt, mezzanine debt and equity investments. The Company’s debt investments may generally range in maturity from 3 to 10 years and, are made to the United States and to a limited extent, non-United States corporations, partnerships and other business entities, which operate in various industries and geographical regions. In addition, it may invest up to approximately 30% of its portfolio in non-qualifying assets. It invests in sectors, such as aerospace and defense; energy/utilities; auto sector; environmental services, and beverage, among others. PennantPark Investment Advisers, LLC is the Company’s investment advisor.

Receive News & Ratings for Horizon Technology Finance Corporation Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Horizon Technology Finance Corporation and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply