Critical Analysis: Eagle Point Credit (NYSE:ECC) & Westwood Holdings Group (NYSE:WHG)

Eagle Point Credit (NYSE:ECC) and Westwood Holdings Group (NYSE:WHG) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of current recommendations for Eagle Point Credit and Westwood Holdings Group, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Point Credit	0	2	3	1	2.83
Westwood Holdings Group	0	0	1	0	3.00

Eagle Point Credit currently has a consensus target price of $7.46, suggesting a potential upside of 20.78%. Given Eagle Point Credit’s higher probable upside, research analysts clearly believe Eagle Point Credit is more favorable than Westwood Holdings Group.

Institutional and Insider Ownership

19.5% of Eagle Point Credit shares are held by institutional investors. Comparatively, 56.6% of Westwood Holdings Group shares are held by institutional investors. 0.2% of Eagle Point Credit shares are held by insiders. Comparatively, 8.2% of Westwood Holdings Group shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Risk & Volatility

Eagle Point Credit has a beta of 0.37, suggesting that its share price is 63% less volatile than the S&P 500. Comparatively, Westwood Holdings Group has a beta of 0.95, suggesting that its share price is 5% less volatile than the S&P 500.

Valuation & Earnings

This table compares Eagle Point Credit and Westwood Holdings Group”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Point Credit	$179.77 million	4.34	$85.49 million	$0.19	32.50
Westwood Holdings Group	$96.24 million	1.66	$2.21 million	$0.82	20.66

Eagle Point Credit has higher revenue and earnings than Westwood Holdings Group. Westwood Holdings Group is trading at a lower price-to-earnings ratio than Eagle Point Credit, indicating that it is currently the more affordable of the two stocks.

Dividends

Eagle Point Credit pays an annual dividend of $1.68 per share and has a dividend yield of 27.2%. Westwood Holdings Group pays an annual dividend of $0.60 per share and has a dividend yield of 3.5%. Eagle Point Credit pays out 884.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Westwood Holdings Group pays out 73.2% of its earnings in the form of a dividend.

Profitability

This table compares Eagle Point Credit and Westwood Holdings Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Point Credit	12.33%	13.53%	8.26%
Westwood Holdings Group	3.92%	5.19%	4.33%

Summary

Eagle Point Credit beats Westwood Holdings Group on 10 of the 17 factors compared between the two stocks.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.

About Westwood Holdings Group

Westwood Holdings Group, Inc., through its subsidiaries, manages investment assets and provides services for its clients. The company operates in two segments, Advisory and Trust. The Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, and the Westwood Funds; and investment sub-advisory services to mutual funds, pooled investment vehicles, and its Trust segment. The Trust segment offers trust and custodial services; and participates in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Holdings Group, Inc. was founded in 1983 and is based in Dallas, Texas.