Analyzing PennantPark Floating Rate Capital (PFLT) & Its Peers

PennantPark Floating Rate Capital (NYSE:PFLT) is one of 1,265 public companies in the “Asset Management” industry, but how does it weigh in compared to its competitors? We will compare PennantPark Floating Rate Capital to similar businesses based on the strength of its earnings, risk, analyst recommendations, dividends, institutional ownership, profitability and valuation.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for PennantPark Floating Rate Capital and its competitors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennantPark Floating Rate Capital	0	1	1	0	2.50
PennantPark Floating Rate Capital Competitors	1081	4807	6330	104	2.44

PennantPark Floating Rate Capital presently has a consensus target price of $10.50, suggesting a potential upside of 19.32%. As a group, “Asset Management” companies have a potential upside of 50.86%. Given PennantPark Floating Rate Capital’s competitors higher possible upside, analysts clearly believe PennantPark Floating Rate Capital has less favorable growth aspects than its competitors.

Valuation and Earnings

This table compares PennantPark Floating Rate Capital and its competitors gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
PennantPark Floating Rate Capital	$186.35 million	$91.84 million	10.48
PennantPark Floating Rate Capital Competitors	$408.71 million	$205.62 million	2,468.03

PennantPark Floating Rate Capital’s competitors have higher revenue and earnings than PennantPark Floating Rate Capital. PennantPark Floating Rate Capital is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Profitability

This table compares PennantPark Floating Rate Capital and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennantPark Floating Rate Capital	28.31%	10.04%	4.24%
PennantPark Floating Rate Capital Competitors	291.37%	17.45%	3.21%

Insider & Institutional Ownership

19.8% of PennantPark Floating Rate Capital shares are owned by institutional investors. Comparatively, 24.3% of shares of all “Asset Management” companies are owned by institutional investors. 1.0% of PennantPark Floating Rate Capital shares are owned by insiders. Comparatively, 15.5% of shares of all “Asset Management” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

PennantPark Floating Rate Capital pays an annual dividend of $1.23 per share and has a dividend yield of 14.0%. PennantPark Floating Rate Capital pays out 146.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Asset Management” companies pay a dividend yield of 0.2% and pay out 41.4% of their earnings in the form of a dividend.

Risk and Volatility

PennantPark Floating Rate Capital has a beta of 0.97, indicating that its stock price is 3% less volatile than the S&P 500. Comparatively, PennantPark Floating Rate Capital’s competitors have a beta of 0.67, indicating that their average stock price is 33% less volatile than the S&P 500.

Summary

PennantPark Floating Rate Capital competitors beat PennantPark Floating Rate Capital on 11 of the 15 factors compared.

PennantPark Floating Rate Capital Company Profile

PennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. It primarily invests in the United States and to a limited extent non-U.S. companies. The fund typically invests between $2 million and $20 million. The fund also invests in equity securities, such as preferred stock, common stock, warrants or options received in connection with debt investments or through direct investments. It primarily invests between $10 million and $50 million in investments in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies. The companies if rated would be between BB and CCC under the Standard & Poor’s system. The fund invests 30% is invested in non-qualifying assets like investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million, securities of middle-market companies located outside of the United States, high-yield bonds, distressed debt, private equity, securities of public companies that are not thinly traded, and investment companies as defined in the 1940 Act. Under normal conditions, the fund expects atleast 80 percent of its net assets plus any borrowings for investment purposes to be invested in Floating Rate Loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65 percent of its portfolio through senior secured loans. In case of floating rate loans, it holds investments for a period of three to ten years.