Contrasting Brookfield (NYSE:BN) and Fidus Investment (NASDAQ:FDUS)

Brookfield (NYSE:BN) and Fidus Investment (NASDAQ:FDUS) are both finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Analyst Ratings

This is a summary of current recommendations and price targets for Brookfield and Fidus Investment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Brookfield	0	2	10	1	2.92
Fidus Investment	0	2	0	0	2.00

Brookfield currently has a consensus price target of $57.40, indicating a potential upside of 56.90%. Fidus Investment has a consensus price target of $19.50, indicating a potential upside of 2.74%. Given Brookfield’s stronger consensus rating and higher probable upside, analysts plainly believe Brookfield is more favorable than Fidus Investment.

Profitability

This table compares Brookfield and Fidus Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Brookfield	1.85%	3.93%	1.22%
Fidus Investment	45.36%	10.87%	5.64%

Dividends

Brookfield pays an annual dividend of $0.28 per share and has a dividend yield of 0.8%. Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 9.1%. Brookfield pays out 50.9% of its earnings in the form of a dividend. Fidus Investment pays out 82.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Brookfield has increased its dividend for 2 consecutive years.

Valuation & Earnings

This table compares Brookfield and Fidus Investment”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Brookfield	$77.06 billion	1.16	$1.31 billion	$0.55	66.51
Fidus Investment	$155.87 million	4.62	$82.40 million	$2.09	9.08

Brookfield has higher revenue and earnings than Fidus Investment. Fidus Investment is trading at a lower price-to-earnings ratio than Brookfield, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

61.6% of Brookfield shares are owned by institutional investors. Comparatively, 28.1% of Fidus Investment shares are owned by institutional investors. 11.0% of Brookfield shares are owned by insiders. Comparatively, 0.9% of Fidus Investment 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.

Risk and Volatility

Brookfield has a beta of 1.56, meaning that its stock price is 56% more volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 0.69, meaning that its stock price is 31% less volatile than the S&P 500.

Summary

Brookfield beats Fidus Investment on 12 of the 18 factors compared between the two stocks.

About Brookfield

Brookfield Corporation is an alternative asset manager and REIT/Real Estate Investment Manager firm focuses on real estate, renewable power, infrastructure and venture capital and private equity assets. It manages a range of public and private investment products and services for institutional and retail clients. It typically makes investments in sizeable, premier assets across geographies and asset classes. It invests both its own capital as well as capital from other investors. Within private equity and venture capital, it focuses on acquisition, early ventures, control buyouts and financially distressed, buyouts and corporate carve-outs, recapitalizations, convertible, senior and mezzanine financings, operational and capital structure restructuring, strategic re-direction, turnaround, and under-performing midmarket companies. It invests in both public debt and equity markets. It invests in private equity sectors with focus on Business Services include infrastructure, healthcare, road fuel distribution and marketing, construction and real estate; Industrials include manufacturers of automotive batteries, graphite electrodes, returnable plastic packaging, and sanitation management and development; and Residential/ infrastructure services. It targets companies which likely possess underlying real assets, primarily in sectors such as industrial products, building materials, metals, mining, homebuilding, oil and gas, paper and packaging, manufacturing and forest product sectors. It invests globally with focus on North America including Brazil, the United States, Canada; Europe; and Australia; and Asia-Pacific. The firm considers equity investments in the range of $2 million to $500 million. It has a four-year investment period and a 10-year term with two one-year extensions. The firm prefers to take minority stake and majority stake. Brookfield Corporation was founded in 1997 and based in Toronto, Canada with additional offices across Northern America; South America; Europe; Middle East and Asia.

About Fidus Investment

Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.