Altaba (NASDAQ: AABA) and Eagle Point Credit (NYSE:ECC) are both financials companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.
Earnings & Valuation
This table compares Altaba and Eagle Point Credit’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Altaba||$5.17 billion||12.56||-$214.32 million||$1.87||39.76|
|Eagle Point Credit||$55.84 million||6.05||$90.58 million||$2.52||7.26|
Insider and Institutional Ownership
79.7% of Altaba shares are owned by institutional investors. Comparatively, 56.9% of Eagle Point Credit shares are owned by institutional investors. 24.0% of Altaba shares are owned by company insiders. Comparatively, 0.6% of Eagle Point Credit shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Eagle Point Credit pays an annual dividend of $2.40 per share and has a dividend yield of 13.1%. Altaba does not pay a dividend. Eagle Point Credit pays out 95.2% 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 is a breakdown of current ratings and target prices for Altaba and Eagle Point Credit, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Eagle Point Credit||0||0||4||0||3.00|
Altaba currently has a consensus price target of $52.53, suggesting a potential downside of 29.35%. Eagle Point Credit has a consensus price target of $21.13, suggesting a potential upside of 15.44%. Given Eagle Point Credit’s stronger consensus rating and higher probable upside, analysts clearly believe Eagle Point Credit is more favorable than Altaba.
This table compares Altaba and Eagle Point Credit’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Eagle Point Credit||65.86%||10.73%||7.07%|
Risk and Volatility
Altaba has a beta of 1.88, indicating that its share price is 88% more volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.
Altaba Inc. (the Fund), formerly Yahoo! Inc., is a non-diversified, closed-end management investment company. The Fund seeks to track the combined investment return of the Alibaba Shares and the Yahoo Japan Shares it owns. Alibaba Shares represent an approximate 15% equity interest in Alibaba Group Holding Limited (Alibaba), and its Yahoo Japan Corporation ((Yahoo Japa) Shares represent an approximate 36% equity interest in Yahoo Japan. In addition to the Alibaba Shares and the Yahoo Japan Shares, the Fund also owns the minority investments, all of the equity interests in Excalibur IP, LLC (which owns the Excalibur IP Assets) and the marketable debt securities portfolio. The Fund’s external investment advisors are BlackRock Advisors, LLC and Morgan Stanley Smith Barney LLC.
About Eagle Point Credit
Eagle Point Credit Company Inc. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. The Company primarily invests in equity and junior debt tranches of collateralized loan obligations (CLOs) that are collateralized by a portfolio consisting primarily of the below investment grade United States senior secured loans. It may also invest in other securities and instruments related to these investments. The Company’s portfolio includes its investments in various industries, such as business equipment and services; healthcare; electronics/electrical; leisure goods/activities/movies; retailers (except food and drug); chemicals and plastics; telecommunications; financial intermediaries, and utilities. The Company’s advisor is Eagle Point Credit Management LLC.
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