Head to Head Analysis: WhiteHorse Finance (NASDAQ:WHF) & Western Asset Investment Grade Income Fund (NYSE:PAI)

Western Asset Investment Grade Income Fund (NYSE:PAI) and WhiteHorse Finance (NASDAQ:WHF) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Valuation and Earnings

This table compares Western Asset Investment Grade Income Fund and WhiteHorse Finance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Western Asset Investment Grade Income Fund	$4.03 million	29.42	N/A	N/A	N/A
WhiteHorse Finance	$17.10 million	12.45	$20.41 million	$0.39	23.49

WhiteHorse Finance has higher revenue and earnings than Western Asset Investment Grade Income Fund.

Risk and Volatility

Western Asset Investment Grade Income Fund has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, WhiteHorse Finance has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

Institutional & Insider Ownership

19.0% of Western Asset Investment Grade Income Fund shares are owned by institutional investors. Comparatively, 13.2% of WhiteHorse Finance shares are owned by institutional investors. 1.0% of Western Asset Investment Grade Income Fund shares are owned by company insiders. Comparatively, 2.3% of WhiteHorse Finance shares are owned by company 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.

Profitability

This table compares Western Asset Investment Grade Income Fund and WhiteHorse Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Western Asset Investment Grade Income Fund	N/A	N/A	N/A
WhiteHorse Finance	10.65%	12.86%	5.59%

Analyst Ratings

This is a summary of current recommendations for Western Asset Investment Grade Income Fund and WhiteHorse Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Western Asset Investment Grade Income Fund	0	0	0	0	0.00
WhiteHorse Finance	1	2	0	0	1.67

WhiteHorse Finance has a consensus target price of $10.50, indicating a potential upside of 14.63%. Given WhiteHorse Finance’s stronger consensus rating and higher possible upside, analysts clearly believe WhiteHorse Finance is more favorable than Western Asset Investment Grade Income Fund.

Dividends

Western Asset Investment Grade Income Fund pays an annual dividend of $0.56 per share and has a dividend yield of 4.5%. WhiteHorse Finance pays an annual dividend of $1.54 per share and has a dividend yield of 16.8%. WhiteHorse Finance pays out 394.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. WhiteHorse Finance has raised its dividend for 3 consecutive years. WhiteHorse Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

WhiteHorse Finance beats Western Asset Investment Grade Income Fund on 10 of the 13 factors compared between the two stocks.

About Western Asset Investment Grade Income Fund

Western Asset Income Fund is a closed-ended fixed income mutual fund launched and managed by Western Asset Management Company. It is co-managed by Western Asset Management Company Limited. The fund invests in the fixed income markets of the United States. It primarily invests in investment grade debt, including government securities, bank debt, commercial paper, and cash or cash equivalents. The fund benchmarks the performance of its portfolio against the Barclays U.S. Corporate High Yield Index and the Barclays U.S. Credit Index. Western Asset Income Fund was formed on March 22, 1973 and is domiciled in the United States.

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.