Invesco Trust for Investment GradeMncpls (NYSE:VGM) and Hercules Capital (NYSE:HTGC) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their earnings, dividends, analyst recommendations, valuation, profitability, risk and institutional ownership.
Insider & Institutional Ownership
18.2% of Invesco Trust for Investment GradeMncpls shares are owned by institutional investors. Comparatively, 36.0% of Hercules Capital shares are owned by institutional investors. 1.0% of Invesco Trust for Investment GradeMncpls shares are owned by company insiders. Comparatively, 3.1% of Hercules Capital shares are owned by company 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.
Invesco Trust for Investment GradeMncpls pays an annual dividend of $0.64 per share and has a dividend yield of 5.2%. Hercules Capital pays an annual dividend of $1.28 per share and has a dividend yield of 9.6%. 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.
This table compares Invesco Trust for Investment GradeMncpls and Hercules Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Invesco Trust for Investment GradeMncpls||N/A||N/A||N/A|
Valuation and Earnings
This table compares Invesco Trust for Investment GradeMncpls and Hercules Capital’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Invesco Trust for Investment GradeMncpls||N/A||N/A||N/A||N/A||N/A|
|Hercules Capital||$207.75 million||6.24||$76.50 million||$1.19||11.21|
Hercules Capital has higher revenue and earnings than Invesco Trust for Investment GradeMncpls.
Volatility and Risk
Invesco Trust for Investment GradeMncpls has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500. Comparatively, Hercules Capital has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.
This is a summary of recent ratings and recommmendations for Invesco Trust for Investment GradeMncpls and Hercules Capital, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Invesco Trust for Investment GradeMncpls||0||0||0||0||N/A|
Hercules Capital has a consensus target price of $13.63, suggesting a potential upside of 2.14%. Given Hercules Capital’s higher probable upside, analysts plainly believe Hercules Capital is more favorable than Invesco Trust for Investment GradeMncpls.
Hercules Capital beats Invesco Trust for Investment GradeMncpls on 10 of the 11 factors compared between the two stocks.
Invesco Trust for Investment GradeMncpls Company Profile
Invesco Trust for Investment Grade Municipals is a closed-ended fixed income mutual fund launched by Invesco Ltd. The fund is co-managed by Invesco Advisers, Inc., INVESCO Asset Management (Japan) Limited, INVESCO Asset Management Deutschland GmbH, INVESCO Asset Management Limited, Invesco Canada Ltd., Invesco Hong Kong Limited, and INVESCO Senior Secured Management, Inc. It invests in the fixed income markets of the United States. The fund primarily invests in investment grade municipal securities which include municipal bonds, municipal notes, municipal commercial paper, and lease obligations. It employs fundamental analysis with bottom-up security selection approach to create its portfolio. The fund was formerly known as Invesco Van Kampen Trust for Investment Grade Municipals. Invesco Trust for Investment Grade Municipals was formed on January 24, 1992 and is domiciled in the United States.
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.
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