Reviewing Robinhood Markets (NASDAQ:HOOD) and PennantPark Investment (NASDAQ:PNNT)

PennantPark Investment (NASDAQ:PNNT) and Robinhood Markets (NASDAQ:HOOD) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, institutional ownership, profitability, risk, valuation and earnings.

Volatility and Risk

PennantPark Investment has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500. Comparatively, Robinhood Markets has a beta of 2.34, suggesting that its share price is 134% more volatile than the S&P 500.

Profitability

This table compares PennantPark Investment and Robinhood Markets’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PennantPark Investment	11.33%	11.59%	4.23%
Robinhood Markets	42.01%	22.43%	4.56%

Valuation & Earnings

This table compares PennantPark Investment and Robinhood Markets”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PennantPark Investment	$21.50 million	10.89	$48.85 million	$0.16	22.41
Robinhood Markets	$4.47 billion	22.63	$1.88 billion	$2.27	49.59

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

Analyst Ratings

This is a breakdown of recent recommendations and price targets for PennantPark Investment and Robinhood Markets, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PennantPark Investment	1	3	1	0	2.00
Robinhood Markets	0	3	23	2	2.96

PennantPark Investment currently has a consensus target price of $5.10, indicating a potential upside of 42.26%. Robinhood Markets has a consensus target price of $129.83, indicating a potential upside of 15.34%. Given PennantPark Investment’s higher probable upside, research analysts clearly believe PennantPark Investment is more favorable than Robinhood Markets.

Institutional and Insider Ownership

26.6% of PennantPark Investment shares are owned by institutional investors. Comparatively, 93.3% of Robinhood Markets shares are owned by institutional investors. 3.0% of PennantPark Investment shares are owned by insiders. Comparatively, 13.5% of Robinhood Markets shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Summary

Robinhood Markets beats PennantPark Investment on 14 of the 15 factors compared between the two stocks.

About PennantPark Investment

PennantPark Investment Corporation, a business development company is a private equity fund specializes in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The fund typically invests in buildings and real estate, hotels, gaming and leisure, technology, telecommunications, transportation, information technology services, electronics, healthcare & pharmaceuticals, education and childcare, financial services, printing and publishing, consumer products, business services, energy & Related Services and utilities, distribution, oil and gas, media, environmental services, aerospace and defense, building materials, capital equipment, chemicals, plastics, & rubber, food & beverage, wholesale, manufacturing and basic industries and retail. It invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, senior secured debt, subordinated debt, subordinated loans, first lien debt, mezzanine loans, and distressed debt securities and private equity co-investments. It seeks to invest in companies based in the United States. The fund seeks to invest between $10 million and $100 million cross the capital structure (senior secured loans, subordinated debt, and other investments) in its portfolio companies with EBITDA between $10 to $50 million. Its mezzanine loans, senior secured loans, and other investments in its portfolio companies are between $15 million and $50 million. The fund may also make non-control equity and debt investments.

About Robinhood Markets

Robinhood Markets, Inc. operates financial services platform in the United States. Its platform allows users to invest in stocks, exchange-traded funds (ETFs), American depository receipts, options, gold, and cryptocurrencies. The company offers fractional trading, recurring investments, fully-paid securities lending, access to investing on margin, cash sweep, instant withdrawals, retirement program, around-the-clock trading, and initial public offerings participation services. It also provides various learning and education solutions comprise Snacks, an accessible digest of business news stories for a new generation of investors.; Learn, which is an online collection of beginners' guides, feature tutorials, and financial dictionary; Newsfeeds that offer access to free, premium news from sites from various sites, such as Barron's, Reuters, and Dow Jones. In addition, the company offers In-App Education, a resource that covers investing fundamentals, including why people invest, a stock market overview, and tips on how to define investing goals, as well as allows customers to understand the basics of investing before their first trade; and Crypto Learn and Earn, an educational module available to various crypto customers through Robinhood Learn to teach customers the basics related to cryptocurrency. Further, it provides Robinhood credit cards, cash card and spending accounts, and wallets. Robinhood Markets, Inc. was incorporated in 2013 and is headquartered in Menlo Park, California.