Financial Analysis: Palmer Square Capital BDC (NYSE:PSBD) versus Encore Capital Group (NASDAQ:ECPG)

Encore Capital Group (NASDAQ:ECPG) and Palmer Square Capital BDC (NYSE:PSBD) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Analyst Recommendations

This is a breakdown of recent recommendations for Encore Capital Group and Palmer Square Capital BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Encore Capital Group	0	0	2	0	3.00
Palmer Square Capital BDC	0	2	4	0	2.67

Encore Capital Group presently has a consensus price target of $66.50, suggesting a potential upside of 55.74%. Palmer Square Capital BDC has a consensus price target of $16.83, suggesting a potential upside of 0.20%. Given Encore Capital Group’s stronger consensus rating and higher possible upside, equities analysts clearly believe Encore Capital Group is more favorable than Palmer Square Capital BDC.

Profitability

This table compares Encore Capital Group and Palmer Square Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Encore Capital Group	-16.89%	9.46%	2.27%
Palmer Square Capital BDC	96.09%	23.31%	9.23%

Institutional & Insider Ownership

6.5% of Palmer Square Capital BDC shares are owned by institutional investors. 2.9% of Encore Capital Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Earnings & Valuation

This table compares Encore Capital Group and Palmer Square Capital BDC’s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Encore Capital Group	$1.22 billion	0.82	-$206.49 million	($8.78)	-4.86
Palmer Square Capital BDC	$112.22 million	4.87	$107.84 million	N/A	N/A

Palmer Square Capital BDC has lower revenue, but higher earnings than Encore Capital Group.

Summary

Palmer Square Capital BDC beats Encore Capital Group on 7 of the 11 factors compared between the two stocks.

About Encore Capital Group

Encore Capital Group, Inc., a specialty finance company, provides debt recovery solutions and other related services for consumers across financial assets worldwide. The company purchases portfolios of defaulted consumer receivables at deep discounts to face value, as well as manages them by working with individuals as they repay their obligations and works toward financial recovery. It is also involved in the provision of early stage collection, business process outsourcing, and contingent collection services. In addition, the company engages in debt servicing and other portfolio management services to credit originator for non-performing loans. Further, it offers credit management services. Encore Capital Group, Inc. was incorporated in 1999 and is headquartered in San Diego, California.

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.