Horizon Technology Finance (NASDAQ:HRZN) & Kayne Anderson BDC (NYSE:KBDC) Head-To-Head Survey

Horizon Technology Finance (NASDAQ:HRZN) and Kayne Anderson BDC (NYSE:KBDC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, institutional ownership, risk, dividends, earnings and profitability.

Risk & Volatility

Horizon Technology Finance has a beta of 1.1, suggesting that its share price is 10% more volatile than the S&P 500. Comparatively, Kayne Anderson BDC has a beta of 0.04, suggesting that its share price is 96% less volatile than the S&P 500.

Institutional & Insider Ownership

4.9% of Horizon Technology Finance shares are held by institutional investors. 1.3% of Horizon Technology Finance shares are held by company insiders. Comparatively, 3.1% of Kayne Anderson BDC shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Dividends

Horizon Technology Finance pays an annual dividend of $0.72 per share and has a dividend yield of 18.6%. Kayne Anderson BDC pays an annual dividend of $1.60 per share and has a dividend yield of 11.2%. Horizon Technology Finance pays out -450.0% of its earnings in the form of a dividend. Kayne Anderson BDC pays out 120.3% 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.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Horizon Technology Finance and Kayne Anderson BDC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Horizon Technology Finance	3	4	1	0	1.75
Kayne Anderson BDC	0	1	3	0	2.75

Horizon Technology Finance presently has a consensus target price of $6.17, indicating a potential upside of 58.93%. Kayne Anderson BDC has a consensus target price of $15.13, indicating a potential upside of 6.10%. Given Horizon Technology Finance’s higher probable upside, analysts plainly believe Horizon Technology Finance is more favorable than Kayne Anderson BDC.

Profitability

This table compares Horizon Technology Finance and Kayne Anderson BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Horizon Technology Finance	-2.77%	14.52%	5.76%
Kayne Anderson BDC	39.74%	10.23%	5.15%

Valuation & Earnings

This table compares Horizon Technology Finance and Kayne Anderson BDC”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Horizon Technology Finance	$96.02 million	1.93	-$2.66 million	($0.16)	-24.25
Kayne Anderson BDC	$235.82 million	4.02	$93.71 million	$1.33	10.72

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

Summary

Kayne Anderson BDC beats Horizon Technology Finance on 9 of the 16 factors compared between the two stocks.

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.

About Kayne Anderson BDC

Kayne Anderson BDC Inc. is a business development company which invests primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market companies. Kayne Anderson BDC Inc. is based in CHICAGO.