Head to Head Review: Amalgamated Financial (NASDAQ:AMAL) vs. Main Street Capital (NYSE:MAIN)

Amalgamated Financial (NASDAQ:AMAL) and Main Street Capital (NYSE:MAIN) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their institutional ownership, earnings, risk, profitability, analyst recommendations, valuation and dividends.

Insider & Institutional Ownership

75.9% of Amalgamated Financial shares are owned by institutional investors. Comparatively, 20.3% of Main Street Capital shares are owned by institutional investors. 1.3% of Amalgamated Financial shares are owned by insiders. Comparatively, 4.0% of Main Street Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Amalgamated Financial and Main Street Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Amalgamated Financial	23.60%	15.21%	1.31%
Main Street Capital	96.16%	12.70%	6.85%

Dividends

Amalgamated Financial pays an annual dividend of $0.56 per share and has a dividend yield of 1.9%. Main Street Capital pays an annual dividend of $3.06 per share and has a dividend yield of 4.7%. Amalgamated Financial pays out 16.8% of its earnings in the form of a dividend. Main Street Capital pays out 50.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Amalgamated Financial has raised its dividend for 4 consecutive years and Main Street Capital has raised its dividend for 4 consecutive years.

Risk and Volatility

Amalgamated Financial has a beta of 0.89, meaning that its share price is 11% less volatile than the S&P 500. Comparatively, Main Street Capital has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500.

Earnings and Valuation

This table compares Amalgamated Financial and Main Street Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amalgamated Financial	$434.51 million	2.08	$106.43 million	$3.34	8.99
Main Street Capital	$623.14 million	9.34	$508.08 million	$6.07	10.72

Main Street Capital has higher revenue and earnings than Amalgamated Financial. Amalgamated Financial is trading at a lower price-to-earnings ratio than Main Street Capital, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Amalgamated Financial and Main Street Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amalgamated Financial	1	0	1	0	2.00
Main Street Capital	0	4	0	1	2.40

Amalgamated Financial currently has a consensus price target of $33.00, suggesting a potential upside of 9.85%. Main Street Capital has a consensus price target of $59.75, suggesting a potential downside of 8.19%. Given Amalgamated Financial’s higher possible upside, equities analysts clearly believe Amalgamated Financial is more favorable than Main Street Capital.

Summary

Main Street Capital beats Amalgamated Financial on 11 of the 17 factors compared between the two stocks.

About Amalgamated Financial

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services for commercial and retail customers in the United States. The company accepts various deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, and certificates of deposit. It also provides various commercial loans comprising commercial and industrial, multifamily mortgage, and commercial real estate loans; residential mortgage loans; and retail loans, such as residential real estate, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, and safe deposit box rental services; debit and ATM cards; and trust, custody, and investment management services comprising asset safekeeping, corporate actions, income collections, proxy, account transition, asset transfers, and conversion management services. Further, it provides investment products, such as funds spanning equity, fixed-income, real estate, and alternative investment products; and brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.

About Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.