Analyzing PennantPark Investment (PNNT) and Its Peers

PennantPark Investment (NASDAQ:PNNT) is one of 1,744 public companies in the “Capital Markets” industry, but how does it contrast to its peers? We will compare PennantPark Investment to similar companies based on the strength of its earnings, profitability, analyst recommendations, risk, dividends, valuation and institutional ownership.

Insider and Institutional Ownership

26.6% of PennantPark Investment shares are held by institutional investors. Comparatively, 30.5% of shares of all “Capital Markets” companies are held by institutional investors. 3.0% of PennantPark Investment shares are held by company insiders. Comparatively, 13.0% of shares of all “Capital Markets” companies 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.

Volatility & Risk

PennantPark Investment has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, PennantPark Investment’s peers have a beta of 0.82, indicating that their average share price is 18% less volatile than the S&P 500.

Earnings & Valuation

This table compares PennantPark Investment and its peers revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
PennantPark Investment	$21.50 million	$48.85 million	20.28
PennantPark Investment Competitors	$5.22 billion	$399.10 million	17.48

PennantPark Investment’s peers have higher revenue and earnings than PennantPark Investment. PennantPark Investment is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for PennantPark Investment and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennantPark Investment	1	3	1	0	2.00
PennantPark Investment Competitors	5551	20122	22457	642	2.37

PennantPark Investment currently has a consensus target price of $5.10, suggesting a potential upside of 57.16%. As a group, “Capital Markets” companies have a potential upside of 24.85%. Given PennantPark Investment’s higher possible upside, equities analysts plainly believe PennantPark Investment is more favorable than its peers.

Dividends

PennantPark Investment pays an annual dividend of $0.48 per share and has a dividend yield of 14.8%. PennantPark Investment pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 30.0% of their earnings in the form of a dividend. PennantPark Investment has raised its dividend for 1 consecutive years.

Profitability

This table compares PennantPark Investment and its peers’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennantPark Investment	11.33%	11.59%	4.23%
PennantPark Investment Competitors	318.34%	79.19%	3.72%

Summary

PennantPark Investment peers beat PennantPark Investment on 12 of the 15 factors compared.

About PennantPark Investment

PennantPark Investment Corporation, a business development company is a private equity fund 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 buildings and real estate, hotels, gaming and leisure, technology, telecommunications, transportation, information technology services, electronics, healthcare & pharmaceuticals, education and childcare, financial services, printing and publishing, consumer products, business services, energy & Related Services and utilities, distribution, oil and gas, media, environmental services, aerospace and defense, building materials, capital equipment, chemicals, plastics, & rubber, food & beverage, wholesale, manufacturing and basic industries and retail. It invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, senior secured debt, subordinated debt, subordinated loans, first lien debt, mezzanine loans, and distressed debt securities and private equity co-investments. It seeks to invest in companies based in the United States. The fund seeks to invest between $10 million and $100 million cross the capital structure (senior secured loans, subordinated debt, and other investments) in its portfolio companies with EBITDA between $10 to $50 million. 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.