Saratoga Investment (SAR) & Eaton Vance (EV) Head-To-Head Survey

Saratoga Investment (NYSE: SAR) and Eaton Vance (NYSE:EV) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their dividends, profitability, earnings, valuation, analyst recommendations, risk and institutional ownership.

Insider and Institutional Ownership

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17.4% of Saratoga Investment shares are held by institutional investors. Comparatively, 70.5% of Eaton Vance shares are held by institutional investors. 32.0% of Saratoga Investment shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Saratoga Investment pays an annual dividend of $2.00 per share and has a dividend yield of 9.8%. Eaton Vance pays an annual dividend of $1.24 per share and has a dividend yield of 2.3%. Saratoga Investment pays out 119.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eaton Vance pays out 50.0% of its earnings in the form of a dividend. Saratoga Investment has increased its dividend for 2 consecutive years and Eaton Vance has increased its dividend for 37 consecutive years.

Profitability

This table compares Saratoga Investment and Eaton Vance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Saratoga Investment 36.37% 8.76% 3.33%
Eaton Vance 18.77% 34.09% 14.45%

Volatility & Risk

Saratoga Investment has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500. Comparatively, Eaton Vance has a beta of 1.69, suggesting that its stock price is 69% more volatile than the S&P 500.

Earnings & Valuation

This table compares Saratoga Investment and Eaton Vance’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Saratoga Investment $33.16 million 3.85 $11.38 million $1.68 12.14
Eaton Vance $1.53 billion 4.30 $282.13 million $2.48 22.09

Eaton Vance has higher revenue and earnings than Saratoga Investment. Saratoga Investment is trading at a lower price-to-earnings ratio than Eaton Vance, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of current recommendations and price targets for Saratoga Investment and Eaton Vance, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Saratoga Investment 0 2 4 0 2.67
Eaton Vance 0 5 2 0 2.29

Saratoga Investment currently has a consensus target price of $23.83, suggesting a potential upside of 16.83%. Eaton Vance has a consensus target price of $54.64, suggesting a potential downside of 0.25%. Given Saratoga Investment’s stronger consensus rating and higher probable upside, research analysts clearly believe Saratoga Investment is more favorable than Eaton Vance.

Summary

Eaton Vance beats Saratoga Investment on 11 of the 17 factors compared between the two stocks.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. It seeks to invest in the United States. The firm primarily invests $5 million to $20 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $150 million. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. is based in New York, New York with an additional office in Florham Park, New Jersey.

About Eaton Vance

Eaton Vance Corp., through its subsidiaries, engages in the creation, marketing, and management of investment funds in the United States. It also provides investment management and counseling services to institutions and individuals. Further, the company operates as an adviser and distributor of investment companies and separate accounts. As of October 31, 2004, the company provided investment advisory or administration services to approximately 150 funds; approximately 1,300 separately managed individual and institutional accounts; and participated in approximately 40 retail-managed account broker/dealer programs. It markets and distributes shares of funds through a retail network of national and regional broker/dealers, banks, insurance companies, and financial planning firms. Eaton Vance Corp. was incorporated on January 29, 1981 and is headquartered in Boston, Massachusetts.

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