WhiteHorse Finance (NASDAQ: WHF) and Eagle Point Credit (NYSE:ECC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, earnings, risk and profitability.
Earnings and Valuation
This table compares WhiteHorse Finance and Eagle Point Credit’s gross revenue, earnings per share and valuation.
Eagle Point Credit is trading at a lower price-to-earnings ratio than WhiteHorse Finance, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of current ratings and recommmendations for WhiteHorse Finance and Eagle Point Credit, as provided by MarketBeat.com.
WhiteHorse Finance presently has a consensus price target of $15.00, suggesting a potential upside of 3.88%. Eagle Point Credit has a consensus price target of $22.83, suggesting a potential upside of 12.43%. Given Eagle Point Credit’s stronger consensus rating and higher possible upside, analysts clearly believe Eagle Point Credit is more favorable than WhiteHorse Finance.
WhiteHorse Finance pays an annual dividend of $1.42 per share and has a dividend yield of 9.8%. Eagle Point Credit pays an annual dividend of $2.40 per share and has a dividend yield of 11.8%. WhiteHorse Finance pays out 75.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit pays out 46.2% of its earnings in the form of a dividend. Eagle Point Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk & Volatility
WhiteHorse Finance has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.34, suggesting that its stock price is 66% less volatile than the S&P 500.
This table compares WhiteHorse Finance and Eagle Point Credit’s net margins, return on equity and return on assets.
Insider and Institutional Ownership
9.6% of WhiteHorse Finance shares are held by institutional investors. Comparatively, 58.2% of Eagle Point Credit shares are held by institutional investors. 1.4% of WhiteHorse Finance shares are held by insiders. Comparatively, 0.6% of Eagle Point Credit shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Eagle Point Credit beats WhiteHorse Finance on 9 of the 12 factors compared between the two stocks.
About WhiteHorse Finance
WhiteHorse Finance, Inc. is a non-diversified, closed-end management investment company. The Company is a direct lender targeting debt investments in privately held, small-cap companies located in the United States. The Company’s investment objective is to generate attractive risk-adjusted returns primarily by originating and investing in senior secured loans, including first lien and second lien facilities, to performing small-cap companies across a range of industries that typically carry a floating interest rate based on the London Interbank Offered Rate (LIBOR) and have a term of 3 to 6 years. The Company may also make investments at other levels of a company’s capital structure, including mezzanine loans or equity interests. The Company also may receive warrants to purchase common stock in connection with its debt investments. Its investment advisor is H.I.G. WhiteHorse Advisers, LLC.
About Eagle Point Credit
Eagle Point Credit Company Inc. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. The Company primarily invests in equity and junior debt tranches of collateralized loan obligations (CLOs) that are collateralized by a portfolio consisting primarily of the below investment grade United States senior secured loans. It may also invest in other securities and instruments related to these investments. The Company’s portfolio includes its investments in various industries, such as business equipment and services; healthcare; electronics/electrical; leisure goods/activities/movies; retailers (except food and drug); chemicals and plastics; telecommunications; financial intermediaries, and utilities. The Company’s advisor is Eagle Point Credit Management LLC.