Rand Capital (NASDAQ:RAND) & Medallion Financial (NASDAQ:MFIN) Critical Survey

Medallion Financial (NASDAQ:MFIN) and Rand Capital (NASDAQ:RAND) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Dividends

Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.8%. Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 8.0%. Medallion Financial pays out 27.3% of its earnings in the form of a dividend. Rand Capital pays out -47.7% 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. Rand Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Medallion Financial has a beta of 1.42, indicating that its share price is 42% more volatile than the S&P 500. Comparatively, Rand Capital has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent recommendations for Medallion Financial and Rand Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medallion Financial	0	0	1	0	3.00
Rand Capital	0	0	0	0	0.00

Medallion Financial currently has a consensus target price of $12.00, indicating a potential upside of 18.81%. Given Medallion Financial’s stronger consensus rating and higher possible upside, equities analysts plainly believe Medallion Financial is more favorable than Rand Capital.

Profitability

This table compares Medallion Financial and Rand Capital’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%
Rand Capital	-90.42%	6.97%	6.47%

Institutional and Insider Ownership

40.6% of Medallion Financial shares are held by institutional investors. 24.6% of Medallion Financial shares are held by insiders. Comparatively, 68.2% of Rand Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Medallion Financial and Rand Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medallion Financial	$302.03 million	0.78	$35.88 million	$1.76	5.74
Rand Capital	$8.56 million	5.03	$8.83 million	($2.43)	-5.97

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

Summary

Medallion Financial beats Rand Capital on 11 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 Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.