Victory Capital (NASDAQ:VCTR) and StoneCastle Financial (NASDAQ:BANX) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, dividends, institutional ownership and risk.

Profitability

This table compares Victory Capital and StoneCastle Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Victory Capital 14.05% 28.63% 12.94%
StoneCastle Financial 53.01% N/A N/A

Analyst Ratings

This is a summary of recent ratings for Victory Capital and StoneCastle Financial, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Victory Capital 0 3 7 0 2.70
StoneCastle Financial 0 0 1 0 3.00

Victory Capital presently has a consensus price target of $23.25, suggesting a potential upside of 6.46%. StoneCastle Financial has a consensus price target of $25.00, suggesting a potential upside of 13.28%. Given StoneCastle Financial’s stronger consensus rating and higher possible upside, analysts clearly believe StoneCastle Financial is more favorable than Victory Capital.

Volatility and Risk

Victory Capital has a beta of 1.79, meaning that its stock price is 79% more volatile than the S&P 500. Comparatively, StoneCastle Financial has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Valuation and Earnings

This table compares Victory Capital and StoneCastle Financial’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Victory Capital $413.41 million 3.57 $63.70 million $1.46 14.96
StoneCastle Financial $17.73 million 8.17 $10.03 million $1.64 13.46

Victory Capital has higher revenue and earnings than StoneCastle Financial. StoneCastle Financial is trading at a lower price-to-earnings ratio than Victory Capital, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

15.2% of Victory Capital shares are owned by institutional investors. Comparatively, 27.3% of StoneCastle Financial shares are owned by institutional investors. 10.2% of Victory Capital shares are owned by insiders. Comparatively, 8.1% of StoneCastle Financial shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Victory Capital pays an annual dividend of $0.20 per share and has a dividend yield of 0.9%. StoneCastle Financial pays an annual dividend of $1.52 per share and has a dividend yield of 6.9%. Victory Capital pays out 13.7% of its earnings in the form of a dividend. StoneCastle Financial pays out 92.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. StoneCastle Financial has increased its dividend for 2 consecutive years. StoneCastle Financial is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

StoneCastle Financial beats Victory Capital on 9 of the 17 factors compared between the two stocks.

Victory Capital Company Profile

Victory Capital Holdings, Inc., together with its subsidiaries, operates as an independent investment management company in the United States. It offers investment advisory, fund administration, and distribution services through broker-dealers, retirement platforms, and registered investment advisor networks. As of December 31, 2018, its franchises and solutions platform managed a set of 71 investment strategies for a range of institutional and retail clients. The company was founded in 2013 and is headquartered in Brooklyn, Ohio.

StoneCastle Financial Company Profile

StoneCastle Financial Corp. is a closed ended balanced mutual fund launched and managed by StoneCastle Asset Management LLC. It invests in public equity markets of the United States. The fund invests in stocks of companies operating across the banking sector. It invests in dividend paying growth and value stocks of companies. For its fixed income portion, the fund invests in subordinated debt securities which are rated BBB- or better by Kroll Ratings. The fund employs fundamental analysis with bottom-up security picking approach by focusing on factors such as review of historical and prospective financial information, interviews with management and key employees of the prospective bank, financial models and projections, changes in interest rates, changes in unemployment rates, changes in home prices, changes in economic activity to create its portfolio. It employs proprietary research to create its portfolio. StoneCastle Financial Corp. was formed on February 7, 2013 and is domiciled in the United States.

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