Hercules Capital (NYSE:HTGC) and Aberdeen Japan Equity Fund (NYSE:JEQ) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.
Volatility & Risk
Hercules Capital has a beta of 0.86, meaning that its stock price is 14% less volatile than the S&P 500. Comparatively, Aberdeen Japan Equity Fund has a beta of 0.73, meaning that its stock price is 27% less volatile than the S&P 500.
This table compares Hercules Capital and Aberdeen Japan Equity Fund’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Aberdeen Japan Equity Fund||N/A||N/A||N/A|
This is a summary of current recommendations and price targets for Hercules Capital and Aberdeen Japan Equity Fund, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Aberdeen Japan Equity Fund||0||0||0||0||N/A|
Hercules Capital currently has a consensus price target of $13.46, indicating a potential upside of 4.17%. Given Hercules Capital’s higher probable upside, research analysts clearly believe Hercules Capital is more favorable than Aberdeen Japan Equity Fund.
Institutional and Insider Ownership
30.5% of Hercules Capital shares are owned by institutional investors. Comparatively, 62.9% of Aberdeen Japan Equity Fund shares are owned by institutional investors. 3.3% of Hercules Capital shares are owned by company insiders. Comparatively, 52.1% of Aberdeen Japan Equity Fund shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Hercules Capital pays an annual dividend of $1.28 per share and has a dividend yield of 9.9%. Aberdeen Japan Equity Fund pays an annual dividend of $0.07 per share and has a dividend yield of 1.0%. Hercules Capital pays out 107.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Valuation and Earnings
This table compares Hercules Capital and Aberdeen Japan Equity Fund’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hercules Capital||$207.75 million||6.48||$76.50 million||$1.19||10.86|
|Aberdeen Japan Equity Fund||N/A||N/A||N/A||N/A||N/A|
Hercules Capital has higher revenue and earnings than Aberdeen Japan Equity Fund.
Hercules Capital beats Aberdeen Japan Equity Fund on 8 of the 11 factors compared between the two stocks.
Hercules Capital Company Profile
Hercules Capital, Inc. is a business development company. The firm specializing in providing venture debt, debt, senior secured loans, and growth capital to privately held venture capital-backed companies at all stages of development from startups, to expansion stage including select publicly listed companies and select special opportunity lower middle market companies that require additional capital to fund acquisitions, recapitalizations and refinancing and established-stage companies. The firm provides growth capital financing solutions for capital extension; management buy-out and corporate spin-out financing solutions; company, asset specific, or intellectual property acquisition financing; convertible, subordinated and/or mezzanine loans; domestic and international corporate expansion; vendor financing; revenue acceleration by sales and marketing development, and manufacturing expansion. It provides asset-based financing with a focus on cash flow; accounts receivable facilities; equipment loans or leases; equipment acquisition; facilities build-out and/or expansion; working capital revolving lines of credit; inventory. The firm also provides bridge financing to IPO or mergers and acquisitions or technology acquisition; dividend recapitalizations and other sources of investor liquidity; cash flow financing to protect against share price volatility; competitor acquisition; pre-IPO financing for extra cash on the balance sheet; public company financing to continue asset growth and production capacity; short-term bridge financing; and strategic and intellectual property acquisition financings. It also focuses on customized financing solutions, seed, startups, early stage, emerging growth, mid venture, and late venture financing. The firm invests primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. The firm generally seeks to invest in companies that have been operating for at least six to 12 months prior to the date of their investment. It prefers to invest in technology, energy technology, sustainable and renewable technology, and life sciences. Within technology the firm focuses on advanced specialty materials and chemicals; communication and networking, consumer and business products; consumer products and services, digital media and consumer internet; electronics and computer hardware; enterprise software and services; gaming; healthcare services; information services; business services; media, content and information; mobile; resource management; security software; semiconductors; semiconductors and hardware; and software sector. Within energy technology, it invests in agriculture; clean technology; energy and renewable technology, fuels and power technology; geothermal; smart grid and energy efficiency and monitoring technologies; solar; and wind. Within life sciences, the firm invests in biopharmaceuticals; biotechnology tools; diagnostics; drug discovery, development and delivery; medical devices and equipment; surgical devices; therapeutics; pharma services; and specialty pharmaceuticals. It also invests in educational services. The firm invests primarily in United States based companies and considers investment in the West Coast, Mid-Atlantic regions, Southeast and Midwest; particularly in the areas of software, biotech and information services. It invests generally between $1 million to $40 million in companies focused primarily on business services, communications, electronics, hardware, and healthcare services. The firm invests primarily in private companies but also have investments in public companies. For equity investments, the firm seeks to represent a controlling interest in its portfolio companies which may exceed 25% of the voting securities of such companies. The firm seeks to invest a limited portion of its assets in equipment-based loans to early-stage prospective portfolio companies. These loans are generally for amounts up to $3 million but may be up to $15 million for certain energy technology venture investments. The firm allows certain debt investments have the right to convert a portion of the debt investment into equity. It also co-invests with other private equity firms. The firm seeks to exit its investments through initial public offering, a private sale of equity interest to a third party, a merger or an acquisition of the company or a purchase of the equity position by the company or one of its stockholders. The firm has structured debt with warrants which typically have maturities of 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 ranging from three to four years; and equity related securities with an investment horizon ranging from three to seven years. The firm prefers to invest through its balance sheet capital. The firm 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 Hartford, Connecticut; Boston, Massachusetts; Elmhurst, Illinois; Santa Monica, California; McLean, Virginia; New York, New York; Radnor, Pennsylvania; and Washington, District of Columbia.
Aberdeen Japan Equity Fund Company Profile
Aberdeen Japan Equity Fund, Inc. is a close ended equity mutual fund launched and managed by Aberdeen Standard Investments (Asia) Limited. It invests in the public equity markets of Japan. The fund invests in stocks of companies operating across diversified sectors. It employs quantitative analysis to build its portfolio. The fund employs a quantitative analysis to create its portfolio. It benchmarks the performance of its portfolio against the TOPIX Index. The fund was previously known as Japan Equity Fund, Inc. Aberdeen Japan Equity Fund, Inc. was formed on July 12, 1990 and is domiciled in the United States.
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