Financial Analysis: OFS Credit (NASDAQ:OCCI) & Franklin Resources (NYSE:BEN)

Franklin Resources (NYSE:BEN) and OFS Credit (NASDAQ:OCCI) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, profitability, valuation, analyst recommendations, dividends, earnings and risk.

Profitability

This table compares Franklin Resources and OFS Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Franklin Resources	8.12%	10.58%	4.21%
OFS Credit	N/A	N/A	N/A

Dividends

Franklin Resources pays an annual dividend of $1.32 per share and has a dividend yield of 4.1%. OFS Credit pays an annual dividend of $1.17 per share and has a dividend yield of 48.7%. Franklin Resources pays out 100.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. OFS Credit pays out -95.9% of its earnings in the form of a dividend. Franklin Resources has raised its dividend for 45 consecutive years. OFS Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Franklin Resources and OFS Credit, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Franklin Resources	2	3	4	1	2.40
OFS Credit	0	0	0	0	0.00

Franklin Resources presently has a consensus price target of $32.00, suggesting a potential downside of 1.79%. Given Franklin Resources’ stronger consensus rating and higher probable upside, equities analysts plainly believe Franklin Resources is more favorable than OFS Credit.

Valuation and Earnings

This table compares Franklin Resources and OFS Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Franklin Resources	$8.77 billion	1.93	$524.90 million	$1.31	24.87
OFS Credit	$44.15 million	1.60	-$35.83 million	($1.22)	-1.97

Franklin Resources has higher revenue and earnings than OFS Credit. OFS Credit is trading at a lower price-to-earnings ratio than Franklin Resources, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

47.6% of Franklin Resources shares are owned by institutional investors. Comparatively, 23.8% of OFS Credit shares are owned by institutional investors. 23.4% of Franklin Resources shares are owned by company insiders. Comparatively, 1.0% of OFS Credit shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Franklin Resources has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500. Comparatively, OFS Credit has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500.

Summary

Franklin Resources beats OFS Credit on 16 of the 18 factors compared between the two stocks.

About Franklin Resources

Franklin Resources, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries. The firm invests in the public equity, fixed income, and alternative markets. Franklin Resources, Inc. was founded in 1947 and is based in San Mateo, California with an additional office in Calgary, Canada; Dubai, United Arab Emirates; Edinburgh, United Kingdom; Fort Lauderdale, United States; Hyderabad, India; London, United Kingdom; Rancho Cordova, United states; Shanghai, China; Singapore; Stamford, United States; and Vienna, Austria.

About OFS Credit

OFS Credit Company, Inc. is a fund of OFS Advisor.