Medallion Financial (NASDAQ:MFIN) and Palmer Square Capital BDC (NYSE:PSBD) Critical Comparison

Palmer Square Capital BDC (NYSE:PSBD) and Medallion Financial (NASDAQ:MFIN) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, analyst recommendations, institutional ownership, profitability, dividends and earnings.

Insider & Institutional Ownership

6.5% of Palmer Square Capital BDC shares are held by institutional investors. Comparatively, 40.6% of Medallion Financial shares are held by institutional investors. 1.1% of Palmer Square Capital BDC shares are held by insiders. Comparatively, 24.6% of Medallion Financial shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares Palmer Square Capital BDC and Medallion Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palmer Square Capital BDC	$143.51 million	2.69	$47.67 million	$0.43	28.51
Medallion Financial	$302.03 million	0.81	$35.88 million	$1.71	6.18

Palmer Square Capital BDC has higher earnings, but lower revenue than Medallion Financial. Medallion Financial is trading at a lower price-to-earnings ratio than Palmer Square Capital BDC, indicating that it is currently the more affordable of the two stocks.

Dividends

Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 11.7%. Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.5%. Palmer Square Capital BDC pays out 334.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medallion Financial pays out 28.1% of its earnings in the form of a dividend.

Risk & Volatility

Palmer Square Capital BDC has a beta of 0.7, indicating that its stock price is 30% less volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 0.67, indicating that its stock price is 33% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Palmer Square Capital BDC and Medallion Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palmer Square Capital BDC	0	4	0	0	2.00
Medallion Financial	0	2	1	0	2.33

Palmer Square Capital BDC presently has a consensus price target of $13.00, suggesting a potential upside of 6.04%. Medallion Financial has a consensus price target of $12.00, suggesting a potential upside of 13.53%. Given Medallion Financial’s stronger consensus rating and higher possible upside, analysts plainly believe Medallion Financial is more favorable than Palmer Square Capital BDC.

Profitability

This table compares Palmer Square Capital BDC and Medallion Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palmer Square Capital BDC	10.85%	10.77%	4.10%
Medallion Financial	12.12%	9.28%	1.55%

Summary

Medallion Financial beats Palmer Square Capital BDC on 9 of the 16 factors compared between the two stocks.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.

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.