Hercules Capital (NYSE:HTGC – Get Rating) and Insight Select Income Fund (NYSE:INSI – Get Rating) are both small cap finance companies, but which is the better stock? We will compare the two companies based on institutional ownership strength, risk, analyst recommendations, valuation, profitability, earnings and dividends.
Valuation and benefits
This table compares the revenue, earnings per share (EPS) and valuation of Hercules Capital and Insight Select Income Fund.
|Gross revenue||Price/sales ratio||Net revenue||Earnings per share||Price/earnings ratio|
|Capital of Hercules||$280.98 million||6.41||$174.15 million||$0.85||17.11|
|Insight Select Income Fund||N / A||N / A||N / A||N / A||N / A|
Hercules Capital has higher income and profit than Insight Select Income Fund.
Risk and Volatility
Hercules Capital has a beta of 1.36, meaning its stock price is 36% more volatile than the S&P 500. In comparison, Insight Select Income Fund has a beta of 0.27, meaning its stock price is 73% less volatile than the S&P 500.
This table compares the net margins, return on equity and return on assets of Hercules Capital and Insight Select Income Fund.
|Net margins||Return on equity||return on assets|
|Capital of Hercules||38.45%||11.33%||5.67%|
|Insight Select Income Fund||N / A||N / A||N / A|
This is a breakdown of the current ratings for Hercules Capital and Insight Select Income Fund, as reported by MarketBeat.com.
|Sales Ratings||Hold odds||Buy reviews||Strong buy odds||Rating|
|Capital of Hercules||0||3||4||0||2.57|
|Insight Select Income Fund||0||0||0||0||N / A|
Hercules Capital currently has a consensus price target of $18.54, indicating upside potential of 27.48%. Given Hercules Capital’s likely higher upside, stock analysts clearly believe that Hercules Capital is more favorable than Insight Select Income Fund.
Hercules Capital pays an annual dividend of $1.32 per share and has a dividend yield of 9.1%. The Insight Select Income Fund pays an annual dividend of $1.12 per share and has a dividend yield of 6.7%. Hercules Capital pays 155.3% of its earnings as a dividend, suggesting that it may not have sufficient earnings to cover its dividend payment in the future. Hercules Capital has increased its dividend for 1 consecutive year. Hercules Capital is clearly the better dividend-paying stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
25.5% of Hercules Capital shares are held by institutional investors. By comparison, 43.1% of the shares of Insight Select Income Fund are held by institutional investors. 3.3% of Hercules Capital shares are held by insiders. By comparison, 18.8% of the shares of Insight Select Income Fund are held by insiders. Strong institutional ownership indicates that large money managers, endowments, and hedge funds believe a company is poised for long-term growth.
Hercules Capital beats Insight Select Income Fund on 9 of the 12 factors compared between the two stocks.
Hercules Capital company profile (Get a rating)
Hercules Capital, Inc. is a business development company. The company specializing in providing venture debt, debt, senior secured loans and growth capital to private venture capital-backed companies at all stages of development, from startups to the stage of expansion, including some publicly traded companies and special opportunities for lower-middle-market companies that need additional capital to fund acquisitions, recapitalizations and refinancing of early-stage companies. The company provides growth capital financing solutions for capital extension; management buy-out and company spin-out financing solutions; corporate, specific asset or intellectual property acquisition financing; convertible, subordinated and/or mezzanine loans; national and international expansion of the company; vendor financing; revenue acceleration through sales and marketing development and manufacturing expansion. It provides asset-based financing with an emphasis on cash flow; accounts receivable facilities; equipment loans or rentals; acquisition of equipment; construction and/or expansion of facilities; revolving working capital lines of credit; inventory. The company also provides bridge financing for IPO or M&A or technology acquisition; dividend recapitalizations and other sources of liquidity for investors; cash flow financing to hedge against share price volatility; acquisition of competitors; pre-IPO financing for additional liquidity on the balance sheet; financing of public enterprises to pursue the growth of assets and production capacity; short-term bridging financing; and financing of strategic acquisitions and intellectual property. It also focuses on tailored financing solutions, emerging growth, midstream venture capital and late venture capital financing. The company invests mainly in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. The Company generally seeks to invest in companies that have been in business for at least six to twelve months prior to the date of their investment. He prefers to invest in technology, energy technologies, sustainable and renewable technologies and life sciences. In technology, the company focuses on advanced materials and specialty chemicals; communication and networking, consumer and commercial products; consumer products and services, digital media and consumer Internet; electronic and computer equipment; business software and services; games; health services; information services; business services; media, content and information; portable; resource management; security software; semiconductors; semiconductors and hardware; and the software industry. In the field of energy technologies, it invests in agriculture; clean technology; energy and renewable technologies, fuels and energy technologies; geothermal; smart grids and energy efficiency and monitoring technologies; solar; and the wind. Within life sciences, the company invests in biopharmaceuticals; biotechnology tools; Diagnostic; drug discovery, development and delivery; medical apparatus and equipment; surgical apparatus; therapeutic; pharmaceutical services; and specialty pharmaceuticals. It also invests in educational services. The Company invests primarily in US-based companies and plans to invest in the West Coast, Mid-Atlantic, Southeast and Mid-West regions; particularly in the fields of software, biotechnology and information services. The company prefers to invest between $10 million and $250 million in equity per transaction. It typically invests between $1 million and $40 million in companies primarily focused on business services, communications, electronics, hardware, and healthcare services. The company mainly invests in private companies, but also has investments in public companies. For equity investments, the company seeks to represent a majority stake in the companies in its portfolio which may exceed 25% of the voting securities of these companies. The company seeks to invest a limited portion of its assets in equipment-based loans to potential early-stage portfolio companies. These loans are generally for a maximum amount of $3 million, but can reach $15 million for certain risky energy technology investments. The company allows certain debt investments to have the right to convert a portion of the debt investment into equity. It also co-invests with other private equity firms. The company is seeking to exit its investments through an initial public offering, private sale of equity to a third party, merger or acquisition of the company or purchase of the equity by the company or one of its shareholders. The company has structured debt with warrants that typically have maturities between two and seven years with an average of three years; senior debt with an investment horizon of less than three years; equipment loans with an investment horizon of three to four years; and equity-like securities with an investment horizon ranging from three to seven years. The company prefers to invest through its balance sheet capital. The company formerly known as Hercules Technology Growth Capital, Inc. Hercules Capital, Inc. was founded in December 2003 and is based in Palo Alto, California, with additional offices in Connecticut; Boston, MA; San Diego, California; Westport, Connecticut; Elmhurst, Ill.; Santa Monica, California; McLean, Virginia; New York, New York; Radnor, Pennsylvania; and Washington, District of Columbia and London, United Kingdom.
Insight Select Income Fund Company Profile (Get a rating)
Insight Select Income Fund is a closed-end, fixed-income mutual fund launched and managed by Cutwater Asset Management Corp. The fund invests in US fixed income markets. It invests primarily in short-term and long-term debt securities. The fund invests in securities rated among the four highest ratings by Moody’s or Standard & Poor’s, US government bonds or bank bonds. It compares the performance of its portfolios to the Lehman Brothers Aggregate Bond TR index. The fund was formerly known as Cutwater Select Income Fund. Insight Select Income Fund was established on October 13, 1971 and is domiciled in the United States.
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