Head to Head Analysis: MCG Capital Corp (MCGC) & Horizon Technology Finance Corporation (HRZN)

MCG Capital Corp (NASDAQ: MCGC) and Horizon Technology Finance Corporation (NASDAQ:HRZN) are both closed end funds companies, but which is the better stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, profitability, risk, dividends and earnings.

Insider and Institutional Ownership

18.1% of Horizon Technology Finance Corporation shares are owned by institutional investors. 1.3% of Horizon Technology Finance Corporation shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares MCG Capital Corp and Horizon Technology Finance Corporation’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
MCG Capital Corp N/A N/A N/A $0.11 N/A
Horizon Technology Finance Corporation $32.98 million 3.82 -$4.91 million $0.57 19.21

MCG Capital Corp has higher revenue, but lower earnings than Horizon Technology Finance Corporation. MCG Capital Corp is trading at a lower price-to-earnings ratio than Horizon Technology Finance Corporation, indicating that it is currently the more affordable of the two stocks.

Dividends

Horizon Technology Finance Corporation pays an annual dividend of $1.20 per share and has a dividend yield of 11.0%. MCG Capital Corp does not pay a dividend. Horizon Technology Finance Corporation pays out 210.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and recommmendations for MCG Capital Corp and Horizon Technology Finance Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MCG Capital Corp 0 0 0 0 N/A
Horizon Technology Finance Corporation 1 3 1 0 2.00

Horizon Technology Finance Corporation has a consensus target price of $10.75, indicating a potential downside of 1.83%.

Profitability

This table compares MCG Capital Corp and Horizon Technology Finance Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MCG Capital Corp -9.19% -0.34% -0.33%
Horizon Technology Finance Corporation 24.46% 9.96% 6.31%

Summary

Horizon Technology Finance Corporation beats MCG Capital Corp on 9 of the 10 factors compared between the two stocks.

About MCG Capital Corp

PFLT Funding II, LLC, formerly MCG Capital Corporation, is a United States-based company. The Company provides products and services.

About Horizon Technology Finance Corporation

Horizon Technology Finance Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to maximize investment portfolio’s total return by generating current income from the debt investments it makes and capital appreciation from the warrants it receives when making such debt investments. It lends to and invests in development-stage companies in the technology, life science, healthcare information and services and cleantech industries (collectively Target Industries). It is focused on making secured debt investments (Venture Loans) to venture capital backed companies in its Target Industries. As of December 31, 2016, its debt investment portfolio consisted of 44 debt investments. As of December 31, 2016, the Company held warrants to purchase stock, predominantly preferred stock, in 78 portfolio companies, equity positions in five portfolio companies and success fee arrangements in 11 portfolio companies.

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