Head-To-Head Analysis: Capital Southwest Corporation (CSWC) & PowerShares QQQ Trust, Series 1 (QQQ)

Capital Southwest Corporation (NASDAQ: CSWC) and PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their dividends, valuation, institutional ownership, analyst recommendations, profitability, risk and earnings.

Valuation and Earnings

This table compares Capital Southwest Corporation and PowerShares QQQ Trust, Series 1’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Capital Southwest Corporation $27.04 million 9.86 $15.36 million $1.64 10.15
PowerShares QQQ Trust, Series 1 N/A N/A N/A N/A N/A

Capital Southwest Corporation has higher revenue and earnings than PowerShares QQQ Trust, Series 1.

Dividends

Capital Southwest Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 5.0%. 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 out 51.2% of its earnings in the form of a dividend.

Insider & Institutional Ownership

61.8% of Capital Southwest Corporation shares are held by institutional investors. Comparatively, 38.4% of PowerShares QQQ Trust, Series 1 shares are held by institutional investors. 5.9% of Capital Southwest Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Risk and Volatility

Capital Southwest Corporation has a beta of -0.49, suggesting that its share price is 149% less volatile than the S&P 500. Comparatively, PowerShares QQQ Trust, Series 1 has a beta of 1.13, suggesting that its share price is 13% more volatile than the S&P 500.

Profitability

This table compares Capital Southwest Corporation and PowerShares QQQ Trust, Series 1’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capital Southwest Corporation 96.98% 4.34% 3.86%
PowerShares QQQ Trust, Series 1 N/A N/A N/A

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Capital Southwest Corporation and PowerShares QQQ Trust, Series 1, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capital Southwest Corporation 0 1 2 0 2.67
PowerShares QQQ Trust, Series 1 0 0 0 0 N/A

Capital Southwest Corporation currently has a consensus price target of $20.67, suggesting a potential upside of 24.12%. Given Capital Southwest Corporation’s higher possible upside, analysts plainly believe Capital Southwest Corporation is more favorable than PowerShares QQQ Trust, Series 1.

Summary

Capital Southwest Corporation beats PowerShares QQQ Trust, Series 1 on 9 of the 11 factors compared between the two stocks.

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.

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.

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