Head-To-Head Analysis: Amalgamated Financial (NASDAQ:AMAL) and Rand Capital (NASDAQ:RAND)

Rand Capital (NASDAQ:RAND) and Amalgamated Financial (NASDAQ:AMAL) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, dividends, earnings, risk, analyst recommendations, valuation and profitability.

Valuation & Earnings

This table compares Rand Capital and Amalgamated Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rand Capital	-$12.06 million	-2.89	$8.83 million	($2.69)	-4.37
Amalgamated Financial	$453.17 million	2.50	$104.44 million	$3.41	11.09

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

Insider and Institutional Ownership

75.9% of Amalgamated Financial shares are held by institutional investors. 68.2% of Rand Capital shares are held by company insiders. Comparatively, 1.3% of Amalgamated Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Rand Capital and Amalgamated Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rand Capital	1	0	0	0	1.00
Amalgamated Financial	0	1	2	0	2.67

Amalgamated Financial has a consensus price target of $33.50, indicating a potential downside of 11.38%. Given Amalgamated Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Amalgamated Financial is more favorable than Rand Capital.

Dividends

Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 9.9%. Amalgamated Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.8%. Rand Capital pays out -43.1% of its earnings in the form of a dividend. Amalgamated Financial pays out 19.9% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Amalgamated Financial has increased its dividend for 4 consecutive years. Rand Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Rand Capital	-124.17%	6.37%	6.21%
Amalgamated Financial	23.05%	14.80%	1.31%

Volatility & Risk

Rand Capital has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500. Comparatively, Amalgamated Financial has a beta of 0.81, indicating that its share price is 19% less volatile than the S&P 500.

Summary

Amalgamated Financial beats Rand Capital on 13 of the 17 factors compared between the two stocks.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.

About Amalgamated Financial

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services for commercial and retail customers in the United States. The company accepts various deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, and certificates of deposit. It also provides various commercial loans comprising commercial and industrial, multifamily mortgage, and commercial real estate loans; residential mortgage loans; and retail loans, such as residential real estate, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, and safe deposit box rental services; debit and ATM cards; and trust, custody, and investment management services comprising asset safekeeping, corporate actions, income collections, proxy, account transition, asset transfers, and conversion management services. Further, it provides investment products, such as funds spanning equity, fixed-income, real estate, and alternative investment products; and brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.