Financial Analysis: Invent Ventures (OTCMKTS:IDEA) vs. Ares Capital (NASDAQ:ARCC)

Invent Ventures (OTCMKTS:IDEA) and Ares Capital (NASDAQ:ARCC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, valuation, risk, profitability, earnings and analyst recommendations.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Invent Ventures	91.12%	N/A	N/A
Ares Capital	44.94%	10.48%	5.00%

Volatility and Risk

Invent Ventures has a beta of -50.51, meaning that its share price is 5,151% less volatile than the S&P 500. Comparatively, Ares Capital has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500.

Analyst Recommendations

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Invent Ventures	0	0	0	0	0.00
Ares Capital	0	2	7	0	2.78

Ares Capital has a consensus target price of $22.86, indicating a potential upside of 1.86%. Given Ares Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Ares Capital is more favorable than Invent Ventures.

Institutional and Insider Ownership

27.4% of Ares Capital shares are owned by institutional investors. 19.4% of Invent Ventures shares are owned by company insiders. Comparatively, 0.5% of Ares Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Valuation & Earnings

This table compares Invent Ventures and Ares Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Invent Ventures	$790,000.00	1.52	$710,000.00	N/A	N/A
Ares Capital	$1.50 billion	10.54	$1.52 billion	$2.05	10.95

Ares Capital has higher revenue and earnings than Invent Ventures.

Summary

Ares Capital beats Invent Ventures on 10 of the 12 factors compared between the two stocks.

About Invent Ventures

Invent Ventures, Inc., formerly known as Los Angeles Syndicate of Technology, Inc., is venture capital firm specializing in incubation, seed, start ups, growth capital, and early stage investments. The firm prefers to invest in technology companies including web-based software, digital media, mobile applications, social media, consumer internet, online advertising and healthcare technology . It prefers to invest in the Los Angeles area of United States. The firm seeks to invest up to $0.25 million. Invent Ventures, Inc. was founded on August 18, 2005 and is based in Santa Monica, California.

About Ares Capital

Ares Capital Corporation is a business development company specializing in acquisition, recapitalization, mezzanine debt, restructurings, rescue financing, and leveraged buyout transactions of middle market companies. It also makes growth capital and general refinancing. It prefers to make investments in companies engaged in the basic and growth manufacturing, business services, consumer products, health care products and services, and information technology service sectors. The fund will also consider investments in industries such as restaurants, retail, oil and gas, and technology sectors. It focuses on investments in Northeast, Mid-Atlantic, Southeast and Southwest regions from its New York office, the Midwest region, from the Chicago office, and the Western region from the Los Angeles office. The fund typically invests between $20 million and $200 million and a maximum of $400 million in companies with an EBITDA between $10 million and $250 million. It makes debt investments between $10 million and $100 million The fund invests through revolvers, first lien loans, warrants, unitranche structures, second lien loans, mezzanine debt, private high yield, junior capital, subordinated debt, and non-control preferred and common equity. The fund also selectively considers third-party-led senior and subordinated debt financings and opportunistically considers the purchase of stressed and discounted debt positions. The fund prefers to be an agent and/or lead the transactions in which it invests. The fund also seeks board representation in its portfolio companies.