Critical Analysis: Hennessy Advisors (HNNA) versus Fidus Investment (FDUS)
Hennessy Advisors (NASDAQ:HNNA) and Fidus Investment (NASDAQ:FDUS) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, risk, profitability, analyst recommendations and institutional ownership.
This table compares Hennessy Advisors and Fidus Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
This is a summary of recent ratings and recommmendations for Hennessy Advisors and Fidus Investment, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Fidus Investment has a consensus price target of $16.00, indicating a potential upside of 13.72%. Given Fidus Investment’s higher probable upside, analysts plainly believe Fidus Investment is more favorable than Hennessy Advisors.
Hennessy Advisors pays an annual dividend of $0.40 per share and has a dividend yield of 3.2%. Fidus Investment pays an annual dividend of $1.56 per share and has a dividend yield of 11.1%. Fidus Investment pays out 109.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hennessy Advisors has increased its dividend for 3 consecutive years and Fidus Investment has increased its dividend for 3 consecutive years.
Institutional and Insider Ownership
18.9% of Hennessy Advisors shares are owned by institutional investors. Comparatively, 28.5% of Fidus Investment shares are owned by institutional investors. 41.6% of Hennessy Advisors shares are owned by insiders. Comparatively, 1.3% of Fidus Investment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.
Valuation and Earnings
This table compares Hennessy Advisors and Fidus Investment’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hennessy Advisors||$52.96 million||1.84||$14.94 million||N/A||N/A|
|Fidus Investment||$68.61 million||5.02||$43.95 million||$1.43||9.84|
Fidus Investment has higher revenue and earnings than Hennessy Advisors.
Volatility & Risk
Hennessy Advisors has a beta of 0.58, meaning that its share price is 42% less volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 1, meaning that its share price has a similar volatility profile to the S&P 500.
Fidus Investment beats Hennessy Advisors on 10 of the 14 factors compared between the two stocks.
Hennessy Advisors Company Profile
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.
Fidus Investment Company Profile
Fidus Investment Corporation is a business development company specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.
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