Critical Contrast: WhiteHorse Finance (NASDAQ:WHF) vs. The European Equity Fund (NYSE:EEA)

WhiteHorse Finance (NASDAQ:WHF) and The European Equity Fund (NYSE:EEA) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, earnings, valuation, profitability, dividends, institutional ownership and analyst recommendations.

Earnings and Valuation

This table compares WhiteHorse Finance and The European Equity Fund”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WhiteHorse Finance	$103.26 million	2.28	$20.41 million	$0.45	22.51
The European Equity Fund	$6.29 million	9.43	N/A	N/A	N/A

WhiteHorse Finance has higher revenue and earnings than The European Equity Fund.

Profitability

This table compares WhiteHorse Finance and The European Equity Fund’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WhiteHorse Finance	10.65%	12.86%	5.59%
The European Equity Fund	N/A	N/A	N/A

Institutional & Insider Ownership

13.2% of WhiteHorse Finance shares are held by institutional investors. Comparatively, 51.9% of The European Equity Fund shares are held by institutional investors. 2.3% of WhiteHorse Finance shares are held by insiders. Comparatively, 0.1% of The European Equity Fund shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

WhiteHorse Finance has a beta of 1.25, suggesting that its share price is 25% more volatile than the S&P 500. Comparatively, The European Equity Fund has a beta of 1.11, suggesting that its share price is 11% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for WhiteHorse Finance and The European Equity Fund, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WhiteHorse Finance	1	2	0	0	1.67
The European Equity Fund	0	0	0	0	0.00

WhiteHorse Finance currently has a consensus target price of $11.75, suggesting a potential upside of 15.99%. Given WhiteHorse Finance’s stronger consensus rating and higher probable upside, equities research analysts plainly believe WhiteHorse Finance is more favorable than The European Equity Fund.

Dividends

WhiteHorse Finance pays an annual dividend of $1.54 per share and has a dividend yield of 15.2%. The European Equity Fund pays an annual dividend of $0.17 per share and has a dividend yield of 2.0%. WhiteHorse Finance pays out 342.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

WhiteHorse Finance beats The European Equity Fund on 9 of the 12 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

About The European Equity Fund

The European Equity Fund, Inc. is a closed ended equity mutual fund launched by Deutsche Investment Management Americas Inc. The fund is managed by Deutsche Asset Management International GmbH. It invests in the public equity markets of Europe. The fund seeks to invest in the stocks of companies operating across diversified sectors. It primarily invests in equity or equity-linked securities of companies. The fund seeks to benchmark the performance of its portfolio against the MSCI-EMU Index. It was formerly known as Germany Fund Inc. The European Equity Fund, Inc. was formed on July 23, 1986 and is domiciled in the United States.