Critical Comparison: Eagle Point Credit (NYSE:ECC) & Sprott (NYSE:SII)

Sprott (NYSE:SII) and Eagle Point Credit (NYSE:ECC) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, analyst recommendations, earnings, valuation, profitability and dividends.

Institutional & Insider Ownership

28.3% of Sprott shares are held by institutional investors. Comparatively, 19.5% of Eagle Point Credit shares are held by institutional investors. 18.3% of Sprott shares are held by company insiders. Comparatively, 0.2% of Eagle Point Credit shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Sprott has a beta of 0.95, indicating that its stock price is 5% less volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.37, indicating that its stock price is 63% less volatile than the S&P 500.

Profitability

This table compares Sprott and Eagle Point Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Sprott	23.26%	15.01%	11.97%
Eagle Point Credit	12.33%	13.53%	8.26%

Earnings & Valuation

This table compares Sprott and Eagle Point Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Sprott	$178.65 million	12.69	$49.29 million	$1.95	45.08
Eagle Point Credit	$179.77 million	4.23	$85.49 million	$0.19	31.72

Eagle Point Credit has higher revenue and earnings than Sprott. Eagle Point Credit is trading at a lower price-to-earnings ratio than Sprott, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Sprott and Eagle Point Credit, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Sprott	0	1	3	0	2.75
Eagle Point Credit	0	2	3	1	2.83

Eagle Point Credit has a consensus target price of $7.46, indicating a potential upside of 23.77%. Given Eagle Point Credit’s stronger consensus rating and higher possible upside, analysts clearly believe Eagle Point Credit is more favorable than Sprott.

Dividends

Sprott pays an annual dividend of $1.60 per share and has a dividend yield of 1.8%. Eagle Point Credit pays an annual dividend of $1.68 per share and has a dividend yield of 27.9%. Sprott pays out 82.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit pays out 884.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprott has increased its dividend for 1 consecutive years.

Summary

Sprott beats Eagle Point Credit on 11 of the 17 factors compared between the two stocks.

About Sprott

Sprott Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides asset management, portfolio management, wealth management, fund management, and administrative and consulting services to its clients. It offers mutual funds, hedge funds, and offshore funds, along with managed accounts. Further, the firm also provides broker-dealer activities. Sprott Inc. was formed on February 13, 2008 and is based in Toronto, Canada.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.