Capitala Finance (NASDAQ:CPTA) and Sabine Royalty Trust (NYSE:SBR) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, dividends, institutional ownership, valuation and risk.

Dividends

Capitala Finance pays an annual dividend of $1.00 per share and has a dividend yield of 11.0%. Sabine Royalty Trust pays an annual dividend of $1.76 per share and has a dividend yield of 3.7%. Capitala Finance pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sabine Royalty Trust has increased its dividend for 2 consecutive years.

Profitability

This table compares Capitala Finance and Sabine Royalty Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capitala Finance -34.43% 7.86% 3.14%
Sabine Royalty Trust 95.37% 932.75% 609.50%

Earnings and Valuation

This table compares Capitala Finance and Sabine Royalty Trust’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Capitala Finance $47.29 million 3.08 -$13.42 million $1.00 9.05
Sabine Royalty Trust $52.53 million 13.27 $49.93 million N/A N/A

Sabine Royalty Trust has higher revenue and earnings than Capitala Finance.

Risk and Volatility

Capitala Finance has a beta of 1.16, indicating that its share price is 16% more volatile than the S&P 500. Comparatively, Sabine Royalty Trust has a beta of 0.47, indicating that its share price is 53% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for Capitala Finance and Sabine Royalty Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capitala Finance 0 1 0 0 2.00
Sabine Royalty Trust 0 0 0 0 N/A

Capitala Finance presently has a consensus price target of $9.00, suggesting a potential downside of 0.55%. Given Capitala Finance’s higher possible upside, equities analysts clearly believe Capitala Finance is more favorable than Sabine Royalty Trust.

Institutional & Insider Ownership

18.0% of Capitala Finance shares are held by institutional investors. Comparatively, 9.3% of Sabine Royalty Trust shares are held by institutional investors. 7.3% of Capitala Finance shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Summary

Sabine Royalty Trust beats Capitala Finance on 9 of the 14 factors compared between the two stocks.

About Capitala Finance

Capitala Finance Corp. is a Business Development Company specializing in traditional mezzanine, senior subordinated and unitranche debt, first-lien and second-lien loans, equity investments in sponsored and non-sponsored lower and traditional middle market companies. The fund targets companies in the business services, commercial and professional services, manufacturing, consumer and retail, energy, and health-care industries. It typically considers investments in the United States. The fund invests $5 million and $50 million per transaction in companies with greater than $4.5 million of TTM EBITDA. It may also invest in senior secured positions in "stretch" senior secured loans. The fund makes minority equity co-investments, alongside management or financial sponsors.

About Sabine Royalty Trust

Sabine Royalty Trust holds royalty and mineral interests in various oil and gas properties in the United States. Its royalty and mineral interests include landowner's royalties, overriding royalty interests, minerals, production payments, and other similar non-participatory interest in certain producing and proved undeveloped oil and gas properties located in Florida, Louisiana, Mississippi, New Mexico, Oklahoma, and Texas. The company was founded in 1982 and is based in Dallas, Texas.

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