Comparing WhiteHorse Finance (NASDAQ:WHF) and Carlyle Secured Lending (NASDAQ:CGBD)

Carlyle Secured Lending (NASDAQ:CGBD) and WhiteHorse Finance (NASDAQ:WHF) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, earnings, valuation and risk.

Risk & Volatility

Carlyle Secured Lending has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500. Comparatively, WhiteHorse Finance has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.

Dividends

Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 13.6%. WhiteHorse Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.0%. Carlyle Secured Lending pays out 135.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WhiteHorse Finance pays out 232.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WhiteHorse Finance has raised its dividend for 3 consecutive years. WhiteHorse Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Carlyle Secured Lending and WhiteHorse Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carlyle Secured Lending	30.18%	9.24%	4.29%
WhiteHorse Finance	4.36%	10.72%	4.51%

Analyst Recommendations

This is a summary of recent recommendations for Carlyle Secured Lending and WhiteHorse Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	2	3	2	0	2.00
WhiteHorse Finance	3	2	0	0	1.40

Carlyle Secured Lending currently has a consensus price target of $14.33, suggesting a potential upside of 21.99%. WhiteHorse Finance has a consensus price target of $7.75, suggesting a potential upside of 8.39%. Given Carlyle Secured Lending’s stronger consensus rating and higher probable upside, analysts clearly believe Carlyle Secured Lending is more favorable than WhiteHorse Finance.

Valuation and Earnings

This table compares Carlyle Secured Lending and WhiteHorse Finance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carlyle Secured Lending	$232.59 million	2.57	$88.98 million	$1.18	9.96
WhiteHorse Finance	$15.86 million	10.48	$10.85 million	$0.43	16.63

Carlyle Secured Lending has higher revenue and earnings than WhiteHorse Finance. Carlyle Secured Lending is trading at a lower price-to-earnings ratio than WhiteHorse Finance, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

24.5% of Carlyle Secured Lending shares are owned by institutional investors. Comparatively, 13.2% of WhiteHorse Finance shares are owned by institutional investors. 0.6% of Carlyle Secured Lending shares are owned by insiders. Comparatively, 2.5% of WhiteHorse Finance shares are owned 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.

Summary

Carlyle Secured Lending beats WhiteHorse Finance on 10 of the 17 factors compared between the two stocks.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.