GSV Capital (NASDAQ: GSVC) and KCAP Financial (NASDAQ:KCAP) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their risk, institutional ownership, valuation, profitability, dividends, earnings and analyst recommendations.

Institutional & Insider Ownership

31.6% of GSV Capital shares are held by institutional investors. Comparatively, 20.2% of KCAP Financial shares are held by institutional investors. 0.7% of GSV Capital shares are held by insiders. Comparatively, 8.0% of KCAP Financial shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

KCAP Financial pays an annual dividend of $0.40 per share and has a dividend yield of 11.9%. GSV Capital does not pay a dividend. KCAP Financial pays out 666.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares GSV Capital and KCAP Financial’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
GSV Capital $740,000.00 200.81 -$74.99 million ($0.59) -11.81
KCAP Financial $36.20 million 3.46 -$1.03 million $0.06 55.83

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

Analyst Ratings

This is a summary of current ratings and target prices for GSV Capital and KCAP Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
GSV Capital 0 1 0 0 2.00
KCAP Financial 0 2 1 0 2.33

KCAP Financial has a consensus price target of $9.75, suggesting a potential upside of 191.04%. Given KCAP Financial’s stronger consensus rating and higher possible upside, analysts plainly believe KCAP Financial is more favorable than GSV Capital.

Profitability

This table compares GSV Capital and KCAP Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
GSV Capital -769.78% -6.73% -3.80%
KCAP Financial 7.78% 6.54% 3.46%

Volatility & Risk

GSV Capital has a beta of 1.31, suggesting that its share price is 31% more volatile than the S&P 500. Comparatively, KCAP Financial has a beta of 1.71, suggesting that its share price is 71% more volatile than the S&P 500.

Summary

KCAP Financial beats GSV Capital on 13 of the 16 factors compared between the two stocks.

About GSV Capital

GSV Capital Corp. (GSV Capital) is an externally managed, non-diversified closed-end management investment company. The Company’s investment objective is to maximize its portfolio’s total return, principally by seeking capital gains on its equity and equity-related investments. The Company invests principally in the equity securities, which are venture-capital-backed emerging companies. The Company acquires its investments through direct investments with portfolio companies, secondary marketplaces for private companies and negotiations with selling stockholders. The Company may also invest in select publicly traded equity securities or certain non-United States companies that otherwise meet its investment criteria. It seeks to invest approximately 90% of its portfolio in late-stage companies and the remaining approximately 10% in emerging companies that fit within its targeted areas. Its investment activities are managed by its investment advisor, GSV Asset Management, LLC.

About KCAP Financial

KCAP Financial, Inc. is an internally managed, non-diversified closed-end investment company. The Company has approximately three principal areas of investments. First, the Company originates, structures and invests in senior secured term loans and mezzanine debt primarily in privately-held middle market companies (the debt securities portfolio). In addition, the Company may invest in the equity securities of privately held middle market companies. Second, the Company invests in asset management companies (the Asset Manager Affiliates) that manage collateralized loan obligation funds (CLO Funds). Third, the Company invests in debt and subordinated securities issued by CLOs (CLO fund securities). These CLO fund securities are primarily managed by its Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO funds typically invest in syndicated loans, high-yield bonds and other credit instruments.

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