Cohen & Steers (NYSE:CNS) vs. Prospect Capital (NASDAQ:PSEC) Financial Survey

Prospect Capital (NASDAQ:PSEC) and Cohen & Steers (NYSE:CNS) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Profitability

This table compares Prospect Capital and Cohen & Steers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Prospect Capital	-42.50%	12.29%	5.63%
Cohen & Steers	29.73%	29.40%	19.73%

Valuation and Earnings

This table compares Prospect Capital and Cohen & Steers”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Prospect Capital	$719.44 million	1.71	-$469.92 million	($0.86)	-3.05
Cohen & Steers	$517.42 million	6.17	$151.26 million	$3.19	19.61

Cohen & Steers has lower revenue, but higher earnings than Prospect Capital. Prospect Capital is trading at a lower price-to-earnings ratio than Cohen & Steers, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

9.1% of Prospect Capital shares are held by institutional investors. Comparatively, 51.5% of Cohen & Steers shares are held by institutional investors. 28.0% of Prospect Capital shares are held by company insiders. Comparatively, 45.6% of Cohen & Steers shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Prospect Capital pays an annual dividend of $0.54 per share and has a dividend yield of 20.6%. Cohen & Steers pays an annual dividend of $2.48 per share and has a dividend yield of 4.0%. Prospect Capital pays out -62.8% of its earnings in the form of a dividend. Cohen & Steers pays out 77.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Cohen & Steers has increased its dividend for 16 consecutive years. Prospect Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Prospect Capital and Cohen & Steers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Prospect Capital	2	0	0	0	1.00
Cohen & Steers	1	1	1	0	2.00

Prospect Capital presently has a consensus target price of $2.50, suggesting a potential downside of 4.58%. Cohen & Steers has a consensus target price of $72.50, suggesting a potential upside of 15.89%. Given Cohen & Steers’ stronger consensus rating and higher probable upside, analysts clearly believe Cohen & Steers is more favorable than Prospect Capital.

Volatility and Risk

Prospect Capital has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Cohen & Steers has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.

Summary

Cohen & Steers beats Prospect Capital on 14 of the 17 factors compared between the two stocks.

About Prospect Capital

Prospect Capital Corporation is a business development company. It specializes in middle market, mature, mezzanine finance, later stage, emerging growth, leveraged buyouts, refinancing, acquisitions, recapitalizations, turnaround, growth capital, development, capital expenditures and subordinated debt tranches of collateralized loan obligations, cash flow term loans, market place lending and bridge transactions. It also makes real estate investments particularly in multi-family residential real estate asset class. The fund makes secured debt, senior debt, senior and secured term loans, unitranche debt, first-lien and second lien, private debt, private equity, mezzanine debt, and equity investments in private and microcap public businesses. It focuses on both primary origination and secondary loans/portfolios and invests in situations like debt financings for private equity sponsors, acquisitions, dividend recapitalizations, growth financings, bridge loans, cash flow term loans, real estate financings/investments. It also focuses on investing in small-sized and medium-sized private companies rather than large public companies. The fund typically invests across all industry sectors, with a particular expertise in the energy and industrial sectors. It invests in aerospace and defense, chemicals, conglomerate services, consumer services, ecological, electronics, financial services, machinery, manufacturing, media, pharmaceuticals, retail, software, specialty minerals, textiles and leather, transportation, oil and gas production, coal production, materials, industrials, consumer discretionary, information technology, utilities, pipeline, storage, power generation and distribution, renewable and clean energy, oilfield services, healthcare, food and beverage, education, business services, and other select sectors. It prefers to invest in the United States and Canada. The fund seeks to invest between $10 million to $500 million per transaction in companies with EBITDA between $5 million and $150 million, sales value between $25 million and $500 million, and enterprise value between $5 million and $1000 million. It fund also co-invests for larger deals. The fund seeks control acquisitions by providing multiple levels of the capital structure. The fund focuses on sole, agented, club, or syndicated deals.

About Cohen & Steers

Cohen & Steers, Inc. is a holding company, which operates as an investment manager specializing in liquid real assets, which include real estate securities, listed infrastructure, commodities, natural resource equities, preferred securities, and other income solutions. It manages investment vehicles, such as institutional accounts, open-end funds and closed-end funds. The company was founded by Martin Cohen and Robert Hamilton Steers in 1986 and is headquartered in New York, NY.