Barings BDC (BBDC) versus Hennessy Advisors (HNNA) Financial Survey

Barings BDC (NYSE:BBDC) and Hennessy Advisors (NASDAQ:HNNA) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, earnings, dividends, institutional ownership, profitability and analyst recommendations.

Dividends

Barings BDC pays an annual dividend of $0.40 per share and has a dividend yield of 4.1%. Hennessy Advisors pays an annual dividend of $0.44 per share and has a dividend yield of 4.2%. Barings BDC pays out 25.8% of its earnings in the form of a dividend. Hennessy Advisors has raised its dividend for 4 consecutive years. Hennessy Advisors is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for Barings BDC and Hennessy Advisors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barings BDC 0 1 1 0 2.50
Hennessy Advisors 0 0 0 0 N/A

Barings BDC currently has a consensus price target of $13.00, suggesting a potential upside of 34.44%. Given Barings BDC’s higher probable upside, equities analysts plainly believe Barings BDC is more favorable than Hennessy Advisors.

Earnings & Valuation

This table compares Barings BDC and Hennessy Advisors’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barings BDC $123.00 million 4.03 -$28.65 million $1.55 6.24
Hennessy Advisors $54.59 million 1.54 $20.61 million N/A N/A

Hennessy Advisors has lower revenue, but higher earnings than Barings BDC.

Insider and Institutional Ownership

59.3% of Barings BDC shares are owned by institutional investors. Comparatively, 17.6% of Hennessy Advisors shares are owned by institutional investors. 3.5% of Barings BDC shares are owned by insiders. Comparatively, 40.7% of Hennessy Advisors shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Volatility and Risk

Barings BDC has a beta of 0.75, suggesting that its stock price is 25% less volatile than the S&P 500. Comparatively, Hennessy Advisors has a beta of 0.7, suggesting that its stock price is 30% less volatile than the S&P 500.

Profitability

This table compares Barings BDC and Hennessy Advisors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Barings BDC -50.26% 1.51% 0.79%
Hennessy Advisors 37.76% 25.31% 16.11%

Summary

Hennessy Advisors beats Barings BDC on 8 of the 15 factors compared between the two stocks.

About Barings BDC

Barings BDC, Inc. (NYSE:BBDC) is a business development company specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic. The firm makes equity investments between $1 million and $25 million and debt investments between $5 million and $30 million per transaction, in companies having annual revenues between $20 million and $200 million and EBITDA between $3 million and $35 million and can also co-invest. It typically makes investments between $5 million and $35 million. It primarily invests in senior subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The firm also invests in senior debt securities secured by first lien security interests in portfolio companies. Triangle Capital Corporation was incorporated on October 10, 2006 and is based in Raleigh, North Carolina.

About Hennessy Advisors

Hennessy Advisors, Inc. is publicly owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.

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