Analyzing Horizon Technology Finance (NASDAQ:HRZN) and Medallion Financial (NASDAQ:MFIN)

Horizon Technology Finance (NASDAQ:HRZN) and Medallion Financial (NASDAQ:MFIN) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Profitability

This table compares Horizon Technology Finance and Medallion Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Horizon Technology Finance	-2.77%	14.52%	5.76%
Medallion Financial	12.18%	9.38%	1.61%

Valuation & Earnings

This table compares Horizon Technology Finance and Medallion Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Horizon Technology Finance	$96.02 million	2.01	-$2.66 million	($0.16)	-25.19
Medallion Financial	$353.31 million	0.63	$43.04 million	$1.78	5.29

Medallion Financial has higher revenue and earnings than Horizon Technology Finance. Horizon Technology Finance is trading at a lower price-to-earnings ratio than Medallion Financial, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Horizon Technology Finance has a beta of 1.1, indicating that its share price is 10% more volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500.

Dividends

Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 17.9%. Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 5.1%. Horizon Technology Finance pays out -450.0% of its earnings in the form of a dividend. Medallion Financial pays out 27.0% 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.

Insider & Institutional Ownership

4.9% of Horizon Technology Finance shares are owned by institutional investors. Comparatively, 40.6% of Medallion Financial shares are owned by institutional investors. 1.3% of Horizon Technology Finance shares are owned by insiders. Comparatively, 24.6% of Medallion Financial shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Horizon Technology Finance and Medallion Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Technology Finance	3	4	1	0	1.75
Medallion Financial	0	2	1	0	2.33

Horizon Technology Finance currently has a consensus price target of $6.17, suggesting a potential upside of 53.02%. Medallion Financial has a consensus price target of $12.00, suggesting a potential upside of 27.39%. Given Horizon Technology Finance’s higher possible upside, analysts plainly believe Horizon Technology Finance is more favorable than Medallion Financial.

Summary

Medallion Financial beats Horizon Technology Finance on 8 of the 15 factors compared between the two stocks.

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.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.