Contrasting Oxford Square Capital (NASDAQ:OXSQ) and Bain Capital Specialty Finance (NYSE:BCSF)

Oxford Square Capital (NASDAQ:OXSQ) and Bain Capital Specialty Finance (NYSE:BCSF) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, earnings, dividends, institutional ownership, analyst recommendations, risk and profitability.

Dividends

Oxford Square Capital pays an annual dividend of $0.42 per share and has a dividend yield of 28.8%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 13.2%. Oxford Square Capital pays out -97.7% of its earnings in the form of a dividend. Bain Capital Specialty Finance pays out 147.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance has increased its dividend for 4 consecutive years. Oxford Square Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Oxford Square Capital and Bain Capital Specialty Finance”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Oxford Square Capital	$40.34 million	3.39	-$18.73 million	($0.43)	-3.40
Bain Capital Specialty Finance	$273.24 million	3.02	$98.76 million	$1.14	11.14

Bain Capital Specialty Finance has higher revenue and earnings than Oxford Square Capital. Oxford Square Capital is trading at a lower price-to-earnings ratio than Bain Capital Specialty Finance, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Oxford Square Capital has a beta of 0.38, indicating that its stock price is 62% less volatile than the S&P 500. Comparatively, Bain Capital Specialty Finance has a beta of 0.58, indicating that its stock price is 42% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for Oxford Square Capital and Bain Capital Specialty Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Oxford Square Capital	1	0	0	0	1.00
Bain Capital Specialty Finance	0	2	1	0	2.33

Bain Capital Specialty Finance has a consensus target price of $14.00, suggesting a potential upside of 10.22%. Given Bain Capital Specialty Finance’s stronger consensus rating and higher possible upside, analysts clearly believe Bain Capital Specialty Finance is more favorable than Oxford Square Capital.

Profitability

This table compares Oxford Square Capital and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Oxford Square Capital	-92.37%	14.11%	7.02%
Bain Capital Specialty Finance	27.00%	10.44%	4.35%

Insider & Institutional Ownership

6.4% of Oxford Square Capital shares are owned by institutional investors. 6.5% of Oxford Square Capital shares are owned by insiders. Comparatively, 0.6% of Bain Capital Specialty Finance shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Bain Capital Specialty Finance beats Oxford Square Capital on 10 of the 17 factors compared between the two stocks.

About Oxford Square Capital

Oxford Square Capital Corp. is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.