Contrasting Tri-Continental (NYSE:TY) and Apollo Investment (NASDAQ:AINV)

Apollo Investment (NASDAQ:AINVGet Rating) and Tri-Continental (NYSE:TYGet Rating) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, analyst recommendations, risk, profitability, earnings, valuation and dividends.

Institutional and Insider Ownership

30.8% of Apollo Investment shares are held by institutional investors. Comparatively, 9.7% of Tri-Continental shares are held by institutional investors. 0.9% of Apollo Investment shares are held by insiders. Comparatively, 8.7% of Tri-Continental shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

Apollo Investment pays an annual dividend of $1.24 per share and has a dividend yield of 9.4%. Tri-Continental pays an annual dividend of $4.99 per share and has a dividend yield of 17.6%. Apollo Investment pays out 142.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Investment has raised its dividend for 1 consecutive years.

Profitability

This table compares Apollo Investment and Tri-Continental’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Apollo Investment 25.87% 9.28% 3.55%
Tri-Continental N/A N/A N/A

Volatility and Risk

Apollo Investment has a beta of 1.65, indicating that its share price is 65% more volatile than the S&P 500. Comparatively, Tri-Continental has a beta of 0.96, indicating that its share price is 4% less volatile than the S&P 500.

Valuation and Earnings

This table compares Apollo Investment and Tri-Continental’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Apollo Investment $213.15 million 3.94 $82.36 million $0.87 15.18
Tri-Continental N/A N/A N/A N/A N/A

Apollo Investment has higher revenue and earnings than Tri-Continental.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Apollo Investment and Tri-Continental, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Apollo Investment 0 1 1 0 2.50
Tri-Continental 0 0 0 0 N/A

Apollo Investment presently has a consensus price target of $13.50, indicating a potential upside of 2.20%. Given Apollo Investment’s higher possible upside, analysts plainly believe Apollo Investment is more favorable than Tri-Continental.

Summary

Apollo Investment beats Tri-Continental on 9 of the 12 factors compared between the two stocks.

About Apollo Investment

(Get Rating)

Apollo Investment Corporation is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy – oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media – diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies. The fund seeks to make investments with stated maturities of five to 10 years.

About Tri-Continental

(Get Rating)

Tri-Continental Corporation is a closed ended equity mutual fund launched and managed by Columbia Management Investment Advisers, LLC. It primarily invests in the public equity markets of the United States. The fund invests in stocks of companies that operate across diversified sectors. It seeks to invest in stocks of large-cap companies. The fund benchmarks the performance of its portfolio against S&P 500 Index. Tri-Continental Corporation was formed in January 1929 and is domiciled in the United States.

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