Financial Contrast: Robinhood Markets (NASDAQ:HOOD) and Main Street Capital (NYSE:MAIN)

Robinhood Markets (NASDAQ:HOOD) and Main Street Capital (NYSE:MAIN) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Volatility & Risk

Robinhood Markets has a beta of 2.35, indicating that its share price is 135% more volatile than the S&P 500. Comparatively, Main Street Capital has a beta of 0.74, indicating that its share price is 26% less volatile than the S&P 500.

Insider & Institutional Ownership

93.3% of Robinhood Markets shares are held by institutional investors. Comparatively, 20.3% of Main Street Capital shares are held by institutional investors. 13.5% of Robinhood Markets shares are held by insiders. Comparatively, 3.8% of Main Street Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Robinhood Markets and Main Street Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Robinhood Markets	$4.47 billion	19.93	$1.88 billion	$2.27	43.67
Main Street Capital	$566.39 million	8.81	$493.40 million	$4.96	10.76

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

Profitability

This table compares Robinhood Markets and Main Street Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Robinhood Markets	42.01%	22.43%	4.56%
Main Street Capital	78.49%	11.80%	6.32%

Analyst Ratings

This is a summary of recent recommendations and price targets for Robinhood Markets and Main Street Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Robinhood Markets	1	5	27	2	2.86
Main Street Capital	0	6	5	0	2.45

Robinhood Markets presently has a consensus price target of $130.29, suggesting a potential upside of 31.44%. Main Street Capital has a consensus price target of $61.00, suggesting a potential upside of 14.28%. Given Robinhood Markets’ stronger consensus rating and higher possible upside, research analysts plainly believe Robinhood Markets is more favorable than Main Street Capital.

Summary

Robinhood Markets beats Main Street Capital on 12 of the 15 factors compared between the two stocks.

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.

About Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.