FS KKR Capital (NYSE:FSK) and DigitalBridge Group (NYSE:DBRG) Financial Review

DigitalBridge Group (NYSE:DBRG) and FS KKR Capital (NYSE:FSK) are both mid-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, risk, valuation, institutional ownership, earnings and profitability.

Profitability

This table compares DigitalBridge Group and FS KKR Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
DigitalBridge Group	49.79%	6.31%	3.03%
FS KKR Capital	-28.52%	9.70%	4.14%

Dividends

DigitalBridge Group pays an annual dividend of $0.04 per share and has a dividend yield of 0.3%. FS KKR Capital pays an annual dividend of $1.76 per share and has a dividend yield of 16.7%. DigitalBridge Group pays out 2.6% of its earnings in the form of a dividend. FS KKR Capital pays out -130.4% 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. FS KKR Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares DigitalBridge Group and FS KKR Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
DigitalBridge Group	$374.45 million	8.01	$141.87 million	$1.54	10.39
FS KKR Capital	$1.52 billion	1.92	$11.00 million	($1.35)	-7.81

DigitalBridge Group has higher earnings, but lower revenue than FS KKR Capital. FS KKR Capital is trading at a lower price-to-earnings ratio than DigitalBridge Group, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

DigitalBridge Group has a beta of 1.45, suggesting that its share price is 45% more volatile than the S&P 500. Comparatively, FS KKR Capital has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500.

Insider & Institutional Ownership

92.7% of DigitalBridge Group shares are owned by institutional investors. Comparatively, 36.3% of FS KKR Capital shares are owned by institutional investors. 3.4% of DigitalBridge Group shares are owned by company insiders. Comparatively, 0.2% of FS KKR Capital shares are owned by company 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.

Analyst Recommendations

This is a breakdown of recent ratings for DigitalBridge Group and FS KKR Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
DigitalBridge Group	1	7	1	0	2.00
FS KKR Capital	2	6	0	0	1.75

DigitalBridge Group currently has a consensus price target of $16.00, suggesting a potential upside of 0.00%. FS KKR Capital has a consensus price target of $11.43, suggesting a potential upside of 8.46%. Given FS KKR Capital’s higher probable upside, analysts plainly believe FS KKR Capital is more favorable than DigitalBridge Group.

Summary

DigitalBridge Group beats FS KKR Capital on 10 of the 16 factors compared between the two stocks.

About DigitalBridge Group

DigitalBridge is an infrastructure investment firm specializing in digital infrastructure assets. They provide services to institutional investors. They primarily invest in data centers, cell towers, fiber networks, small cells, and edge infrastructure. DigitalBridge Group, Inc. was founded in 1991 and is headquartered in Boca Raton, Florida with additional offices in Los Angles, California, and New York New York.

About FS KKR Capital

FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.