Fidus Investment (NASDAQ:FDUS – Get Free Report) and Horizon Technology Finance (NASDAQ:HRZN – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, earnings, risk, analyst recommendations, institutional ownership, dividends and valuation.
Profitability
This table compares Fidus Investment and Horizon Technology Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Fidus Investment | 54.03% | 10.91% | 6.04% |
| Horizon Technology Finance | -24.19% | 15.01% | 6.02% |
Analyst Recommendations
This is a summary of recent ratings and recommmendations for Fidus Investment and Horizon Technology Finance, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Fidus Investment | 0 | 2 | 1 | 1 | 2.75 |
| Horizon Technology Finance | 3 | 2 | 1 | 0 | 1.67 |
Risk and Volatility
Fidus Investment has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, Horizon Technology Finance has a beta of 0.99, meaning that its stock price is 1% less volatile than the S&P 500.
Institutional and Insider Ownership
28.1% of Fidus Investment shares are owned by institutional investors. Comparatively, 4.9% of Horizon Technology Finance shares are owned by institutional investors. 0.9% of Fidus Investment shares are owned by insiders. Comparatively, 1.3% of Horizon Technology Finance 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.
Dividends
Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 8.6%. Horizon Technology Finance pays an annual dividend of $1.32 per share and has a dividend yield of 19.7%. Fidus Investment pays out 72.9% of its earnings in the form of a dividend. Horizon Technology Finance pays out -197.0% 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. Horizon Technology Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Valuation and Earnings
This table compares Fidus Investment and Horizon Technology Finance”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Fidus Investment | $146.15 million | 5.00 | $78.29 million | $2.36 | 8.50 |
| Horizon Technology Finance | $99.92 million | 2.97 | -$5.63 million | ($0.67) | -9.99 |
Fidus Investment has higher revenue and earnings than Horizon Technology Finance. Horizon Technology Finance is trading at a lower price-to-earnings ratio than Fidus Investment, indicating that it is currently the more affordable of the two stocks.
Summary
Fidus Investment beats Horizon Technology Finance on 11 of the 16 factors compared between the two stocks.
About Fidus Investment
Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.
About Horizon Technology Finance
Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, cleantech and sustainability industries. It seeks to invest in companies in the United States.
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