Federated Hermes (NYSE:FHI) vs. Portman Ridge Finance (NASDAQ:PTMN) Head to Head Analysis

Portman Ridge Finance (NASDAQ:PTMN) and Federated Hermes (NYSE:FHI) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Profitability

This table compares Portman Ridge Finance and Federated Hermes’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Portman Ridge Finance	-15.92%	11.49%	4.54%
Federated Hermes	21.67%	32.30%	17.05%

Analyst Ratings

This is a summary of recent ratings for Portman Ridge Finance and Federated Hermes, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Portman Ridge Finance	0	1	0	0	2.00
Federated Hermes	0	5	1	0	2.17

Portman Ridge Finance currently has a consensus price target of $14.00, indicating a potential upside of 14.75%. Federated Hermes has a consensus price target of $48.17, indicating a potential downside of 10.27%. Given Portman Ridge Finance’s higher possible upside, research analysts plainly believe Portman Ridge Finance is more favorable than Federated Hermes.

Dividends

Portman Ridge Finance pays an annual dividend of $1.88 per share and has a dividend yield of 15.4%. Federated Hermes pays an annual dividend of $1.36 per share and has a dividend yield of 2.5%. Portman Ridge Finance pays out -202.2% of its earnings in the form of a dividend. Federated Hermes pays out 30.2% 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. Federated Hermes has increased its dividend for 4 consecutive years. Portman Ridge Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Portman Ridge Finance has a beta of 0.6, suggesting that its share price is 40% less volatile than the S&P 500. Comparatively, Federated Hermes has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Institutional and Insider Ownership

30.1% of Portman Ridge Finance shares are owned by institutional investors. Comparatively, 75.9% of Federated Hermes shares are owned by institutional investors. 2.1% of Portman Ridge Finance shares are owned by insiders. Comparatively, 3.8% of Federated Hermes shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Portman Ridge Finance and Federated Hermes”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Portman Ridge Finance	-$2.85 million	-56.57	-$5.93 million	($0.93)	-13.12
Federated Hermes	$1.68 billion	2.48	$268.31 million	$4.51	11.90

Federated Hermes has higher revenue and earnings than Portman Ridge Finance. Portman Ridge Finance is trading at a lower price-to-earnings ratio than Federated Hermes, indicating that it is currently the more affordable of the two stocks.

Summary

Federated Hermes beats Portman Ridge Finance on 14 of the 17 factors compared between the two stocks.

About Portman Ridge Finance

Portman Ridge Finance Corporation is a business development company specializing in investments in unitranche loans (including last out), first lien loans, second lien loans, subordinated debt, equity co-investment, mezzanine, buyout in middle market companies. It also makes acquisitions in businesses complementary to the firm's business. It primarily invests in healthcare, cargo transport, manufacturing, industrial & environmental services, logistics & distribution, media & telecommunications, real estate, education, automotive, agriculture, aerospace/defense, packaging, electronics, finance, non-durable consumer, consumer products, business services, utilities, insurance, and food and beverage sectors. The fund typically invests $1 million to $20 million in its portfolio companies. It provides senior secured term loans from $2 million to $20 million maturing in five to seven years; second lien term loans from $5 million to $15 million maturing in six to eight years; senior unsecured loans $5 million to $23 million maturing in six to eight years; mezzanine loans from $5 million to $15 million maturing in seven to ten years; and equity investments from $1 to $5 million. The fund targets the companies with EBITDA between $5 million and $25 million. While investing in debt securities, it invests in those middle market firms with EBITDA between $10 million and $50 million and/or total debt between $25 million and $150 million. It invests in minority, and majority or control equity positions alongside its private equity sponsor partners.

About Federated Hermes

Federated Hermes, Inc. is a publicly owned investment manager. Through its subsidiaries, the firm provides its services to individuals, including high net worth individuals, banking or thrift institutions, investment companies, pension and profit sharing plans, pooled investment vehicles, charitable organizations, state or municipal government entities, and registered investment advisors. Through its subsidiaries, it manages separate client-focused equity, fixed income, balanced and money market mutual funds along with separate client-focused equity, fixed income, money market, and balanced portfolios. Through its subsidiaries, the firm invests in the public equity and fixed income markets across the globe. It invests in growth and value stocks of small-cap, mid-cap, and large-cap companies. The firm makes its fixed income investments in ultra-short, short-term, and intermediate-term mortgage-backed, U.S. Government, U.S. corporate, high yield, and municipal securities. It employs both fundamental and quantitative analysis to make its equity investments. Federated Hermes, Inc. was founded in 1955 and is based in Pittsburgh, Pennsylvania with additional offices in New York City and London, United Kingdom.