PowerShares QQQ Trust, Series 1 (NASDAQ: QQQ) and Capital Southwest Corporation (NASDAQ:CSWC) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, dividends, valuation, institutional ownership and earnings.
Risk and Volatility
PowerShares QQQ Trust, Series 1 has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, Capital Southwest Corporation has a beta of -0.49, suggesting that its stock price is 149% less volatile than the S&P 500.
Valuation & Earnings
This table compares PowerShares QQQ Trust, Series 1 and Capital Southwest Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|PowerShares QQQ Trust, Series 1||N/A||N/A||N/A||N/A||N/A|
|Capital Southwest Corporation||$27.04 million||9.66||$15.30 million||$1.64||9.95|
Capital Southwest Corporation has higher revenue and earnings than PowerShares QQQ Trust, Series 1.
Insider and Institutional Ownership
39.3% of PowerShares QQQ Trust, Series 1 shares are owned by institutional investors. Comparatively, 62.7% of Capital Southwest Corporation shares are owned by institutional investors. 5.9% of Capital Southwest Corporation shares are owned by company 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.
This is a summary of current ratings and price targets for PowerShares QQQ Trust, Series 1 and Capital Southwest Corporation, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|PowerShares QQQ Trust, Series 1||0||0||0||0||N/A|
|Capital Southwest Corporation||0||1||2||0||2.67|
Capital Southwest Corporation has a consensus target price of $20.67, suggesting a potential upside of 26.71%. Given Capital Southwest Corporation’s higher probable upside, analysts clearly believe Capital Southwest Corporation is more favorable than PowerShares QQQ Trust, Series 1.
PowerShares QQQ Trust, Series 1 pays an annual dividend of $1.30 per share and has a dividend yield of 0.9%. Capital Southwest Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 5.2%. Capital Southwest Corporation pays out 51.2% of its earnings in the form of a dividend.
This table compares PowerShares QQQ Trust, Series 1 and Capital Southwest Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|PowerShares QQQ Trust, Series 1||N/A||N/A||N/A|
|Capital Southwest Corporation||96.98%||4.34%||3.86%|
Capital Southwest Corporation beats PowerShares QQQ Trust, Series 1 on 9 of the 11 factors compared between the two stocks.
PowerShares QQQ Trust, Series 1 Company Profile
PowerShares QQQ Trust, Series 1 is a unit investment trust that issues securities called Nasdaq-100 Index Tracking Stock. The Trust’s investment objective is to provide investment results that generally correspond to the price and yield performance of the Nasdaq-100 Index. The Trust provides investors with the opportunity to purchase units of beneficial interest in the Trust representing proportionate undivided interests in the portfolio of securities held by the Trust, which consists of substantially all of the securities, in substantially the same weighting, as the component securities of the Nasdaq-100 Index. Invesco PowerShares Capital Management, LLC is the Sponsor of the Trust and The Bank of New York Mellon is the Trustee.
Capital Southwest Corporation Company Profile
Capital Southwest Corporation is an investment company that specializes in providing customized financing to middle market companies in a range of industry segments located primarily in the United States. The Company is a specialty lending company. Its principal investment objective is to produce risk-adjusted returns by generating current income from debt investments and capital appreciation from its equity and equity related investments. It focuses on partnering with business owners, management teams and financial sponsors to provide financing solutions to fund growth, changes of control, or other corporate events. In allocating future investments, it focuses on investing in senior and subordinated debt securities secured by security interests in portfolio company assets, coupled with equity interests. It targets senior and subordinated investments in the lower middle market and private loan transactions, as well as first and second lien syndicated loans in middle market companies.
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