Saratoga Investment (NYSE:SAR) vs. Horizon Technology Finance (NASDAQ:HRZN) Head to Head Survey

Saratoga Investment (NYSE:SAR) and Horizon Technology Finance (NASDAQ:HRZN) are both small-cap 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 Saratoga Investment and Horizon Technology Finance, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saratoga Investment	1	5	0	0	1.83
Horizon Technology Finance	1	5	1	0	2.00

Saratoga Investment currently has a consensus price target of $21.50, indicating a potential upside of 9.54%. Horizon Technology Finance has a consensus price target of $5.65, indicating a potential upside of 21.24%. Given Horizon Technology Finance’s stronger consensus rating and higher probable upside, analysts plainly believe Horizon Technology Finance is more favorable than Saratoga Investment.

Institutional & Insider Ownership

19.1% of Saratoga Investment shares are owned by institutional investors. Comparatively, 4.9% of Horizon Technology Finance shares are owned by institutional investors. 10.0% of Saratoga Investment shares are owned by insiders. Comparatively, 0.3% of Horizon Technology Finance 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

Saratoga Investment has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, Horizon Technology Finance has a beta of 0.97, meaning that its stock price is 3% less volatile than the S&P 500.

Valuation & Earnings

This table compares Saratoga Investment and Horizon Technology Finance”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saratoga Investment	$125.71 million	2.55	$36.60 million	$1.00	19.63
Horizon Technology Finance	$96.02 million	3.31	-$2.66 million	$0.43	10.84

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

Dividends

Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 15.3%. Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 15.5%. Saratoga Investment pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Horizon Technology Finance pays out 167.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Horizon Technology Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Saratoga Investment and Horizon Technology Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saratoga Investment	12.70%	8.76%	2.95%
Horizon Technology Finance	22.55%	13.63%	5.53%

Summary

Horizon Technology Finance beats Saratoga Investment on 10 of the 16 factors compared between the two stocks.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.

About Horizon Technology Finance

Horizon Technology Finance Corporation is a business development company specializing in lending and and investing in development-stage investments. It focuses on making secured debt and venture lending investments to venture capital backed companies in the technology, life science, healthcare information and services, cleantech and sustainability industries. It seeks to invest in companies in the United States.