PennantPark Investment (NASDAQ:PNNT) and Allied Minds (OTCMKTS:ALLWF) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.

Analyst Recommendations

This is a summary of recent ratings for PennantPark Investment and Allied Minds, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PennantPark Investment 0 4 1 0 2.20
Allied Minds 0 0 1 0 3.00

PennantPark Investment currently has a consensus target price of $7.50, indicating a potential upside of 16.10%. Given PennantPark Investment’s higher possible upside, research analysts clearly believe PennantPark Investment is more favorable than Allied Minds.

Dividends

PennantPark Investment pays an annual dividend of $0.72 per share and has a dividend yield of 11.1%. Allied Minds does not pay a dividend. PennantPark Investment pays out 96.0% 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 PennantPark Investment and Allied Minds’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PennantPark Investment 28.97% 7.94% 4.09%
Allied Minds N/A N/A N/A

Volatility and Risk

PennantPark Investment has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500. Comparatively, Allied Minds has a beta of 0.18, indicating that its stock price is 82% less volatile than the S&P 500.

Earnings & Valuation

This table compares PennantPark Investment and Allied Minds’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
PennantPark Investment $108.28 million 4.00 $47.71 million $0.75 8.61
Allied Minds N/A N/A N/A N/A N/A

PennantPark Investment has higher revenue and earnings than Allied Minds.

Insider and Institutional Ownership

44.0% of PennantPark Investment shares are owned by institutional investors. 2.0% of PennantPark Investment shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

PennantPark Investment beats Allied Minds on 9 of the 11 factors compared between the two stocks.

About PennantPark Investment

PennantPark Investment Corporation specializes in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The fund typically invests in building and real estate, hotels and gaming, electronics, healthcare, education and childcare, financial services, printing and publishing, consumer products, business services, energy and utilities, distribution, oil and gas, media, environmental services, aerospace and defense, manufacturing industries and retail. It invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, subordinated loans, mezzanine loans, and senior secured loans. It seeks to invest in companies based in the United States. The fund seeks to invest between $10 million and $50 million in its portfolio companies. Its mezzanine loans, senior secured loans, and other investments in its portfolio companies are between $15 million and $50 million. The fund may also make non-control equity and debt investments.

About Allied Minds

Allied Minds plc is a private equity and venture capital firm specializing in pre-seed, seed, start-up, and early stage technology investments. The firm prefers to invest across all products, services, and industries with a focus on the life science and technology sector including medical devices, diagnostics, biopharmaceuticals, big data, cyber security, communications, semiconductors, and food safety. It primarily invests in companies based in the United States, but depending on opportunities this could be expanded to a global network of partners and investments. The firm typically invests between $0.25 million and $1 million in seed investments and from $5 million to $10 million in Series A investments. The firm focuses on commercializing technologies from leading United States Universities and national labs. It seeks to take majority equity positions in its portfolio companies. The firm partners with universities to fund licensing deals and corporate spin-outs. It prefers to continue to invest alongside a syndicate for larger Series A and follow-on rounds. Allied Minds plc is based in Boston, Massachusetts with additional offices in London, United Kingdom; Los Angeles, California; Seattle, Washington; New York; New York and Washington, DC.

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