PCM Fund (NYSE:PCM) vs. Apollo Investment (NASDAQ:AINV) Critical Review

PCM Fund (NYSE:PCM – Get Rating) and Apollo Investment (NASDAQ:AINV – Get Rating) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, risk, valuation, analyst recommendations and earnings.

Institutional and Insider Ownership

6.6% of PCM Fund shares are held by institutional investors. Comparatively, 30.8% of Apollo Investment shares are held by institutional investors. 1.0% of PCM Fund shares are held by insiders. Comparatively, 0.9% of Apollo Investment shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Get PCM Fund alerts:

Analyst Recommendations

This is a summary of recent recommendations and price targets for PCM Fund and Apollo Investment, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
PCM Fund	0	0	0	0	N/A
Apollo Investment	0	2	0	0	2.00

Apollo Investment has a consensus price target of $13.38, indicating a potential upside of 20.28%. Given Apollo Investment's higher possible upside, analysts plainly believe Apollo Investment is more favorable than PCM Fund.

Valuation & Earnings

This table compares PCM Fund and Apollo Investment's gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
PCM Fund	N/A	N/A	N/A	N/A	N/A
Apollo Investment	$213.15 million	3.31	$82.36 million	$1.27	8.76

Apollo Investment has higher revenue and earnings than PCM Fund.

Dividends

PCM Fund pays an annual dividend of $0.96 per share and has a dividend yield of 10.2%. Apollo Investment pays an annual dividend of $1.24 per share and has a dividend yield of 11.2%. Apollo Investment pays out 97.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Investment has increased its dividend for 1 consecutive years. Apollo Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares PCM Fund and Apollo Investment's net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
PCM Fund	N/A	N/A	N/A
Apollo Investment	38.64%	9.34%	3.64%

Volatility & Risk

PCM Fund has a beta of 0.63, meaning that its stock price is 37% less volatile than the S&P 500. Comparatively, Apollo Investment has a beta of 1.69, meaning that its stock price is 69% more volatile than the S&P 500.

Summary

Apollo Investment beats PCM Fund on 9 of the 11 factors compared between the two stocks.

About PCM Fund

(Get Rating)

PCM Fund Inc. is a closed ended fixed income mutual fund launched and managed by Allianz Global Investors Fund Management LLC. The fund is co-managed by Pacific Investment Management Company LLC. It seeks to invest in fixed income markets. The fund invests primarily in commercial mortgage-backed securities. It employs fundamental analysis with a focus on top down stock picking approach to create its portfolio. The fund benchmarks the performance of its portfolio against Barclay's CMBS Investment Grade Index. PCM Fund Inc was formed on September 2, 1993 and is domiciled in the United States.

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.

Receive News & Ratings for PCM Fund Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for PCM Fund and related companies with MarketBeat.com's FREE daily email newsletter.