Solar Capital (NASDAQ:SLRC) and Gabelli Convertbl and Incm Scrts Fnd (NYSE:GCV) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, earnings, institutional ownership, analyst recommendations, risk, dividends and valuation.

Dividends

Solar Capital pays an annual dividend of $1.64 per share and has a dividend yield of 7.9%. Gabelli Convertbl and Incm Scrts Fnd pays an annual dividend of $0.48 per share and has a dividend yield of 9.4%. Solar Capital pays out 92.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Solar Capital and Gabelli Convertbl and Incm Scrts Fnd’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Solar Capital 46.58% 8.05% 4.38%
Gabelli Convertbl and Incm Scrts Fnd N/A N/A N/A

Earnings and Valuation

This table compares Solar Capital and Gabelli Convertbl and Incm Scrts Fnd’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Solar Capital $153.53 million 5.75 $66.87 million $1.77 11.80
Gabelli Convertbl and Incm Scrts Fnd N/A N/A N/A N/A N/A

Solar Capital has higher revenue and earnings than Gabelli Convertbl and Incm Scrts Fnd.

Risk & Volatility

Solar Capital has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500. Comparatively, Gabelli Convertbl and Incm Scrts Fnd has a beta of 0.95, indicating that its share price is 5% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Solar Capital and Gabelli Convertbl and Incm Scrts Fnd, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Solar Capital 0 1 3 0 2.75
Gabelli Convertbl and Incm Scrts Fnd 0 0 0 0 N/A

Solar Capital presently has a consensus price target of $22.38, suggesting a potential upside of 7.16%. Given Solar Capital’s higher possible upside, research analysts plainly believe Solar Capital is more favorable than Gabelli Convertbl and Incm Scrts Fnd.

Institutional & Insider Ownership

58.1% of Solar Capital shares are held by institutional investors. Comparatively, 14.1% of Gabelli Convertbl and Incm Scrts Fnd shares are held by institutional investors. 5.9% of Solar Capital shares are held by company insiders. Comparatively, 11.6% of Gabelli Convertbl and Incm Scrts Fnd shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Summary

Solar Capital beats Gabelli Convertbl and Incm Scrts Fnd on 7 of the 11 factors compared between the two stocks.

About Solar Capital

Solar Capital Ltd. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate sctivities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities. It also invests in life sciences with focus on specialty pharmaceuticals, medical devices, biotech, health Care Providers and services; health Care technology, enabling technologies and tools. The fund primarily invests in United States. The fund's investments generally range between $5 million and $100 million. The fund invests in companies with revenues between $50 million and $1 billion and EBITDA between $15 million and $100 million. It invests in the form of senior secured loans, mezzanine loans, and equity securities. It may also seek investments in thinly traded public companies and also make secondary investments. The fund makes non-control equity investments. It primarily exits within three years of the initial capital commitment.

About Gabelli Convertbl and Incm Scrts Fnd

The Gabelli Convertible and Income Securities Fund Inc. is a closed-ended balanced mutual fund launched by GAMCO Investors, Inc. The fund is managed by Gabelli Funds, LLC. It invests in public equity and fixed income markets. The fund seeks to invest in stocks of companies operating across diversified sectors. It primarily invests in convertible securities and other debt and equity securities. The fund benchmarks the performance of its portfolio against the Standard & Poor's 500 Index, Barclays Government/Credit Bond Index, and Lipper Convertible Securities Fund Average. It was formerly known as Gabelli Convertible Securities Fund Inc. The Gabelli Convertible and Income Securities Fund Inc. was formed on December 19, 1988 and is domiciled in the United States.

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