Solar Senior Capital (NASDAQ:SUNS) and Adams Diversified Equity Fund (NYSE:ADX) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, earnings, risk, profitability, institutional ownership, dividends and valuation.

Volatility and Risk

Solar Senior Capital has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Adams Diversified Equity Fund has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500.

Dividends

Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 7.7%. Adams Diversified Equity Fund pays an annual dividend of $0.22 per share and has a dividend yield of 1.3%. Solar Senior Capital 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. Solar Senior Capital has raised its dividend for 3 consecutive years. Solar Senior Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation & Earnings

This table compares Solar Senior Capital and Adams Diversified Equity Fund’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Solar Senior Capital $39.81 million 7.34 $13.81 million $1.41 12.91
Adams Diversified Equity Fund N/A N/A N/A N/A N/A

Solar Senior Capital has higher revenue and earnings than Adams Diversified Equity Fund.

Insider and Institutional Ownership

19.3% of Solar Senior Capital shares are held by institutional investors. Comparatively, 13.8% of Adams Diversified Equity Fund shares are held by institutional investors. 5.7% of Solar Senior Capital shares are held by insiders. Comparatively, 0.2% of Adams Diversified Equity Fund shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Solar Senior Capital and Adams Diversified Equity Fund’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Solar Senior Capital 35.72% 8.59% 3.98%
Adams Diversified Equity Fund N/A N/A N/A

Analyst Ratings

This is a summary of current recommendations and price targets for Solar Senior Capital and Adams Diversified Equity Fund, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Solar Senior Capital 0 0 1 0 3.00
Adams Diversified Equity Fund 0 0 0 0 N/A

Solar Senior Capital currently has a consensus target price of $19.00, indicating a potential upside of 4.40%. Given Solar Senior Capital’s higher possible upside, equities research analysts plainly believe Solar Senior Capital is more favorable than Adams Diversified Equity Fund.

Summary

Solar Senior Capital beats Adams Diversified Equity Fund on 10 of the 12 factors compared between the two stocks.

Solar Senior Capital Company Profile

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. It does not invest in start-up companies or companies having speculative business plans. The fund prefers debt investments between $5 million and $30 million in companies with EBITDA between $20 million and $60 million.

Adams Diversified Equity Fund Company Profile

Adams Diversified Equity Fund, Inc. is a self-managed investment trust. The firm invests in the public equity markets of the United States. It invests in stocks of large-cap companies across diversified sectors to make its investments. The firm employs a fundamental and quantitative analysis with a bottom-up stock picking approach, while focusing on earnings growth prospects, financial strength, cash flow generation, valuation, capital allocation, return on capital, defendable market position, market competition, macroeconomic backdrop, profitability, mileposts and catalysts, and "point in cycle" identification to make its investments. It obtains external research to complement its in-house research to make its investments. The firm benchmarks the performance of its portfolios against the S&P 500 Index. It was formerly known as The Adams Express Company. Adams Diversified Equity Fund, Inc. was founded in 1840 and is based in Baltimore, Maryland.

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