Medallion Financial (NASDAQ:MFIN – Get Free Report) and Stellus Capital Investment (NYSE:SCM – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their risk, earnings, profitability, dividends, valuation, analyst recommendations and institutional ownership.
Profitability
This table compares Medallion Financial and Stellus Capital Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Medallion Financial | 12.62% | 9.04% | 1.46% |
| Stellus Capital Investment | 38.24% | 11.06% | 4.12% |
Analyst Recommendations
This is a breakdown of current ratings and recommmendations for Medallion Financial and Stellus Capital Investment, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Medallion Financial | 0 | 0 | 1 | 0 | 3.00 |
| Stellus Capital Investment | 0 | 1 | 0 | 0 | 2.00 |
Earnings and Valuation
This table compares Medallion Financial and Stellus Capital Investment”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Medallion Financial | $302.03 million | 0.76 | $35.88 million | $1.76 | 5.64 |
| Stellus Capital Investment | $104.74 million | 3.51 | $45.85 million | $1.45 | 8.92 |
Stellus Capital Investment has lower revenue, but higher earnings than Medallion Financial. Medallion Financial is trading at a lower price-to-earnings ratio than Stellus Capital Investment, indicating that it is currently the more affordable of the two stocks.
Dividends
Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.8%. Stellus Capital Investment pays an annual dividend of $1.60 per share and has a dividend yield of 12.4%. Medallion Financial pays out 27.3% of its earnings in the form of a dividend. Stellus Capital Investment pays out 110.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Insider & Institutional Ownership
40.6% of Medallion Financial shares are held by institutional investors. Comparatively, 13.2% of Stellus Capital Investment shares are held by institutional investors. 24.6% of Medallion Financial shares are held by insiders. Comparatively, 4.0% of Stellus Capital Investment shares are held by 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.
Risk and Volatility
Medallion Financial has a beta of 1.38, meaning that its share price is 38% more volatile than the S&P 500. Comparatively, Stellus Capital Investment has a beta of 0.9, meaning that its share price is 10% less volatile than the S&P 500.
Summary
Medallion Financial beats Stellus Capital Investment on 9 of the 16 factors compared between the two stocks.
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.
About Stellus Capital Investment
Stellus Capital Investment Corporation is a business development company specializing in investments in private middle-market companies. It invests through first lien, second lien, unitranche, and mezzanine debt financing, often with a corresponding equity investment. The fund prefers to invest in US and Canada. The fund seeks to invest in companies with an EBITDA between $5 million and $50 million.
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