Comparing FS KKR Capital (NYSE:FSK) & WhiteHorse Finance (NASDAQ:WHF)

WhiteHorse Finance (NASDAQ:WHF) and FS KKR Capital (NYSE:FSK) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Risk and Volatility

WhiteHorse Finance has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500. Comparatively, FS KKR Capital has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500.

Institutional and Insider Ownership

13.2% of WhiteHorse Finance shares are owned by institutional investors. Comparatively, 36.3% of FS KKR Capital shares are owned by institutional investors. 2.5% of WhiteHorse Finance shares are owned by insiders. Comparatively, 0.3% of FS KKR Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and price targets for WhiteHorse Finance and FS KKR Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WhiteHorse Finance	2	3	0	0	1.60
FS KKR Capital	2	7	0	0	1.78

WhiteHorse Finance currently has a consensus target price of $7.75, suggesting a potential upside of 6.02%. FS KKR Capital has a consensus target price of $13.36, suggesting a potential upside of 34.31%. Given FS KKR Capital’s stronger consensus rating and higher possible upside, analysts clearly believe FS KKR Capital is more favorable than WhiteHorse Finance.

Dividends

WhiteHorse Finance pays an annual dividend of $1.00 per share and has a dividend yield of 13.7%. FS KKR Capital pays an annual dividend of $1.80 per share and has a dividend yield of 18.1%. WhiteHorse Finance pays out 161.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FS KKR Capital pays out 6,000.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WhiteHorse Finance has raised its dividend for 3 consecutive years.

Valuation and Earnings

This table compares WhiteHorse Finance and FS KKR Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WhiteHorse Finance	$72.67 million	2.24	$14.34 million	$0.62	11.79
FS KKR Capital	$1.52 billion	1.83	$11.00 million	$0.03	331.50

WhiteHorse Finance has higher earnings, but lower revenue than FS KKR Capital. WhiteHorse Finance is trading at a lower price-to-earnings ratio than FS KKR Capital, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares WhiteHorse Finance and FS KKR Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WhiteHorse Finance	19.73%	9.66%	4.03%
FS KKR Capital	0.72%	5.21%	2.25%

Summary

WhiteHorse Finance beats FS KKR Capital on 9 of the 16 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

About FS KKR Capital

FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.