Analyzing Ares Capital (ARCC) and Live Ventures (LIVE)

Live Ventures (NASDAQ: LIVE) and Ares Capital (NASDAQ:ARCC) are both computer and technology companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, earnings, analyst recommendations, institutional ownership, profitability, valuation and risk.

Institutional and Insider Ownership

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4.4% of Live Ventures shares are held by institutional investors. Comparatively, 42.7% of Ares Capital shares are held by institutional investors. 64.9% of Live Ventures shares are held by insiders. Comparatively, 0.5% of Ares Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Live Ventures and Ares Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Live Ventures 4.29% 16.54% 4.31%
Ares Capital 57.50% 8.43% 4.88%

Dividends

Ares Capital pays an annual dividend of $1.52 per share and has a dividend yield of 9.5%. Live Ventures does not pay a dividend. Ares Capital pays out 109.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

Live Ventures has a beta of -3.21, meaning that its share price is 421% less volatile than the S&P 500. Comparatively, Ares Capital has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and target prices for Live Ventures and Ares Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Live Ventures 0 0 0 0 N/A
Ares Capital 0 2 9 0 2.82

Ares Capital has a consensus target price of $17.90, indicating a potential upside of 12.16%. Given Ares Capital’s higher probable upside, analysts plainly believe Ares Capital is more favorable than Live Ventures.

Earnings and Valuation

This table compares Live Ventures and Ares Capital’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Live Ventures $152.06 million 0.16 $6.50 million N/A N/A
Ares Capital $1.16 billion 5.87 $667.00 million $1.39 11.48

Ares Capital has higher revenue and earnings than Live Ventures.

Summary

Ares Capital beats Live Ventures on 11 of the 14 factors compared between the two stocks.

About Live Ventures

Live Ventures Incorporated is a holding company for diversified businesses. The Company’s segments include Manufacturing Segment, Marketplace Platform Segment and Services Segment. The Manufacturing Segment consists of Marquis Industries, Inc. The Marketplace Platform segment consists of livedeal.com and Modern Everyday, Inc. The Services Segment consists of the local exchange carrier billings business and velocity local. It operates LiveDeal.com, a real-time deal engine that connects restaurants across the United States and consumers through an online mobile platform. It is focused on the residential, commercial and hospitality end-markets. As of September 30, 2016, the Company operated its business through 13 divisions, each specializing in a distinct area of the business, such as Best Buy flooring Source, Marquis Carpet, Best Buy Hard surface, A-O Industries, Quantum Textiles and B and H Tufters.

About Ares Capital

Ares Capital Corporation is a specialty finance company. The Company operates as a closed-end, non-diversified management investment company. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. It invests primarily in the United States middle-market companies. It may from time to time invest in larger or smaller (in particular, for investments in early-stage and/or venture capital-backed) companies. It invests primarily in first lien senior secured loans (including unitranche loans, which are loans that combine both senior and mezzanine debt, generally in a first lien position), second lien senior secured loans, and mezzanine debt, which in some cases includes an equity component. It invests in various industries, such as automotive services, business services, consumer products, and containers and packaging. Ares Capital Management LLC serves as its investment advisor.

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