Analyzing FS KKR Capital (NYSE:FSK) and CION Investment (NYSE:CION)

FS KKR Capital (NYSE:FSK) and CION Investment (NYSE:CION) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, institutional ownership, valuation, dividends and profitability.

Risk & Volatility

FS KKR Capital has a beta of 0.94, meaning that its stock price is 6% less volatile than the S&P 500. Comparatively, CION Investment has a beta of 1.08, meaning that its stock price is 8% more volatile than the S&P 500.

Profitability

This table compares FS KKR Capital and CION Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS KKR Capital	13.24%	6.24%	2.75%
CION Investment	-4.57%	9.63%	4.00%

Insider & Institutional Ownership

36.3% of FS KKR Capital shares are owned by institutional investors. Comparatively, 32.0% of CION Investment shares are owned by institutional investors. 0.2% of FS KKR Capital shares are owned by insiders. Comparatively, 0.6% of CION Investment shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and recommmendations for FS KKR Capital and CION Investment, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS KKR Capital	0	8	0	0	2.00
CION Investment	1	2	0	0	1.67

FS KKR Capital presently has a consensus target price of $17.75, suggesting a potential upside of 17.78%. CION Investment has a consensus target price of $8.50, suggesting a potential downside of 10.39%. Given FS KKR Capital’s stronger consensus rating and higher probable upside, equities analysts clearly believe FS KKR Capital is more favorable than CION Investment.

Earnings and Valuation

This table compares FS KKR Capital and CION Investment”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS KKR Capital	$1.72 billion	N/A	$585.00 million	$0.78	19.32
CION Investment	$252.43 million	1.96	$33.90 million	($0.19)	-49.93

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

Dividends

FS KKR Capital pays an annual dividend of $2.56 per share and has a dividend yield of 17.0%. CION Investment pays an annual dividend of $1.44 per share and has a dividend yield of 15.2%. FS KKR Capital pays out 328.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CION Investment pays out -757.9% of its earnings in the form of a dividend. CION Investment has increased its dividend for 1 consecutive years.

Summary

FS KKR Capital beats CION Investment on 9 of the 15 factors compared between the two stocks.

About FS KKR Capital

FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.

About CION Investment

CION Investment Corporation is a business development company. It specializes in investments in senior secured loans, including unitranche loans, First Lien, second lien loans, long-term subordinated loans, and mezzanine loans; equity interests such as warrants or options; and corporate bonds; and other debt securities in middle-market companies. The firm invests in growth capital, acquisitions, leveraged buyouts, market/product expansion, refinancing and recapitalization. The fund also invests up to 30 percent of their assets opportunistically in other types of investments, including the securities of larger public companies and foreign securities. It also makes investments in the secondary loan market. The fund does not invest in start-up companies, turnaround situations, or companies with speculative business plans. The fund prefers to invest in high tech industries, healthcare, pharmaceuticals, business services, media, chemicals, plastic, rubber, telecommunication, consumer services, advertising, printing and publishing, consumer goods, durables, diversified financials, and other industries. It also invests in homebuilding, restaurants, beverage and tobacco bars, broadcasting, distributors, Non-durable good distribution, food beverage and tobacco, energy, oil gas and consumables fuels, insurance, aerospace and defense, industrial machinery, paper and forest product machinery, information technology, metals and mining, and real estate. It primarily seeks to invest in the United States. The fund seeks to invest between $5 million and $50 million in companies with an EBITDA between $25 million and $75 million with average targeted hold of $25 million. It also purchases minority interests in the form of common or preferred equity in the target companies, typically in conjunction with its debt investments or through a co-investment with a financial sponsor. The fund seeks to exit its investments through an initial public offering of common stock, a merger, a sale, or other recapitalization.