Head-To-Head Comparison: Jefferies Financial Group (NYSE:JEF) vs. OFS Capital (NASDAQ:OFS)

OFS Capital (NASDAQ:OFS) and Jefferies Financial Group (NYSE:JEF) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, risk, institutional ownership, profitability and earnings.

Dividends

OFS Capital pays an annual dividend of $0.68 per share and has a dividend yield of 17.9%. Jefferies Financial Group pays an annual dividend of $1.60 per share and has a dividend yield of 2.8%. OFS Capital pays out -41.2% of its earnings in the form of a dividend. Jefferies Financial Group pays out 44.7% 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. OFS Capital has raised its dividend for 3 consecutive years and Jefferies Financial Group has raised its dividend for 2 consecutive years. OFS Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

10.8% of OFS Capital shares are owned by institutional investors. Comparatively, 60.9% of Jefferies Financial Group shares are owned by institutional investors. 0.5% of OFS Capital shares are owned by company insiders. Comparatively, 19.9% of Jefferies Financial Group shares are owned 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 Recommendations

This is a breakdown of current recommendations and price targets for OFS Capital and Jefferies Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OFS Capital	1	1	0	0	1.50
Jefferies Financial Group	0	5	2	0	2.29

OFS Capital presently has a consensus target price of $7.00, suggesting a potential upside of 84.70%. Jefferies Financial Group has a consensus target price of $62.62, suggesting a potential upside of 10.98%. Given OFS Capital’s higher possible upside, analysts plainly believe OFS Capital is more favorable than Jefferies Financial Group.

Profitability

This table compares OFS Capital and Jefferies Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OFS Capital	-62.24%	7.46%	2.67%
Jefferies Financial Group	7.58%	9.23%	1.31%

Earnings and Valuation

This table compares OFS Capital and Jefferies Financial Group”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OFS Capital	$40.69 million	1.25	-$33.09 million	($1.65)	-2.30
Jefferies Financial Group	$11.85 billion	0.92	$710.47 million	$3.58	15.76

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

Risk & Volatility

OFS Capital has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500. Comparatively, Jefferies Financial Group has a beta of 1.54, indicating that its stock price is 54% more volatile than the S&P 500.

Summary

Jefferies Financial Group beats OFS Capital on 11 of the 17 factors compared between the two stocks.

About OFS Capital

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.

About Jefferies Financial Group

Jefferies Financial Group Inc. operates as an investment banking and capital markets firm in the Americas, Europe, the Middle East, and the Asia-Pacific. The company operates in two segments, Investment Banking and Capital Markets, and Asset Management. It provides investment banking, advisory services with respect to mergers or acquisitions, debt financing, restructurings or recapitalizations, and private capital advisory transactions; underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities, equity and equity-linked securities, and loan syndication services; and corporate lending services. The company also offers financing, securities lending, and other prime brokerage services; equities research, sales, and trading services; wealth management services; and online foreign exchange trading services. In addition, it provides investment grade distressed debt securities, U.S. and European government and agency securities, municipal bonds, leveraged loans, emerging markets debt, and interest rate and credit index derivative products; and manages and offers services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. The company was formerly known as Leucadia National Corporation and changed its name to Jefferies Financial Group Inc. in May 2018. Jefferies Financial Group Inc. was founded in 1962 and is headquartered in New York, New York.