Analyzing Palmer Square Capital BDC (NYSE:PSBD) & Hennessy Advisors (NASDAQ:HNNA)

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

Dividends

Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 14.6%. Hennessy Advisors pays an annual dividend of $0.60 per share and has a dividend yield of 5.8%. Palmer Square Capital BDC pays out -228.6% of its earnings in the form of a dividend. Hennessy Advisors pays out 57.7% 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. Palmer Square Capital BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Palmer Square Capital BDC and Hennessy Advisors”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palmer Square Capital BDC	$124.39 million	2.43	-$3.17 million	($0.63)	-15.68
Hennessy Advisors	$35.54 million	2.30	$9.96 million	$1.04	9.95

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

Analyst Recommendations

This is a summary of recent ratings for Palmer Square Capital BDC and Hennessy Advisors, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palmer Square Capital BDC	0	5	0	0	2.00
Hennessy Advisors	0	1	0	0	2.00

Palmer Square Capital BDC presently has a consensus target price of $10.50, suggesting a potential upside of 6.26%. Given Palmer Square Capital BDC’s higher probable upside, equities research analysts clearly believe Palmer Square Capital BDC is more favorable than Hennessy Advisors.

Institutional & Insider Ownership

6.5% of Palmer Square Capital BDC shares are held by institutional investors. Comparatively, 10.3% of Hennessy Advisors shares are held by institutional investors. 1.1% of Palmer Square Capital BDC shares are held by insiders. Comparatively, 36.0% of Hennessy Advisors shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Risk & Volatility

Palmer Square Capital BDC has a beta of 0.85, suggesting that its share price is 15% less volatile than the S&P 500. Comparatively, Hennessy Advisors has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500.

Profitability

This table compares Palmer Square Capital BDC and Hennessy Advisors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palmer Square Capital BDC	-18.27%	11.16%	4.07%
Hennessy Advisors	24.77%	8.31%	5.48%

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 Hennessy Advisors

Hennessy Advisors, Inc. is an employee owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.