OFS Capital (NASDAQ: OFS) and Amalgamated Financial (NASDAQ: AMAL) are both significant players in the finance sector, each offering unique investment opportunities. A thorough assessment of their valuation, earnings, institutional ownership, and dividends reveals critical insights for potential investors.
Analyst Recommendations and Price Targets
According to data from MarketBeat, analysts currently set a consensus target price of $7.00 for OFS Capital, suggesting a potential upside of 50.41%. In contrast, Amalgamated Financial has a consensus target price of $33.50, indicating a more modest potential upside of 2.06%. This significant difference in expected growth has led analysts to view OFS Capital more favorably than its competitor.
Profitability and Dividends
Examining the financial health of both companies, profitability metrics such as net margins, return on equity, and return on assets provide further context. OFS Capital offers an annual dividend of $0.68 per share, yielding 14.6%, while Amalgamated Financial pays $0.56 per share with a yield of 1.7%. Notably, OFS Capital’s payout ratio stands at 283.3%, raising concerns about its ability to sustain these dividends in the future. In contrast, Amalgamated Financial maintains a more conservative payout ratio of 16.9%.
Both firms have demonstrated a commitment to returning value to shareholders, with OFS Capital increasing its dividend for three consecutive years and Amalgamated Financial achieving this milestone for four consecutive years.
Valuation and Earnings
In terms of financial performance, Amalgamated Financial outpaces OFS Capital regarding revenue and earnings. The former operates at a lower price-to-earnings ratio, making it a more affordable investment option at present. This disparity highlights the contrasting financial profiles of the two companies and suggests that Amalgamated Financial may appeal to those seeking a stable investment.
Institutional Ownership Insights
Institutional investment trends further illustrate the differing perceptions of the two companies. Approximately 10.8% of OFS Capital shares are held by institutional investors, compared to a substantial 75.9% for Amalgamated Financial. Insider ownership also varies, with 0.5% of OFS Capital shares owned by insiders and 1.3% for Amalgamated Financial. Strong institutional ownership often indicates confidence in a company’s long-term performance.
Company Profiles
OFS Capital Corporation operates primarily as a business development company, focusing on flexible capital solutions, including debt capital and minority equity investments. It caters to U.S.-based middle-market companies across various sectors, including aerospace, healthcare, and consumer services. The firm typically invests between $3 million and $35 million in companies with revenues ranging from $15 million to $300 million.
Amalgamated Financial Corp., established in 1923 and headquartered in New York, serves as the bank holding company for Amalgamated Bank. It provides a wide range of financial services, including commercial and retail banking, investment management, and trust services. The company offers numerous deposit products and various types of loans, reflecting its comprehensive approach to serving both commercial and retail customers.
Conclusion
In summary, while Amalgamated Financial demonstrates stronger revenue and earnings, OFS Capital offers a higher potential upside and significant dividend yield. Investors should weigh these factors carefully, considering their investment strategies and risk tolerance. Ultimately, the analysis indicates that Amalgamated Financial performs better across most metrics, with 11 out of 16 factors favoring this institution over OFS Capital.
