Eagle Point Credit (NYSE:ECC) & Bain Capital Specialty Finance (NYSE:BCSF) Critical Comparison

Eagle Point Credit (NYSE:ECC) and Bain Capital Specialty Finance (NYSE:BCSF) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their dividends, valuation, analyst recommendations, profitability, institutional ownership, earnings and risk.

Valuation and Earnings

This table compares Eagle Point Credit and Bain Capital Specialty Finance”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Point Credit	-$158.23 million	-2.74	-$115.00 million	$0.61	5.39
Bain Capital Specialty Finance	$78.39 million	8.97	$98.76 million	$0.99	10.95

Bain Capital Specialty Finance has higher revenue and earnings than Eagle Point Credit. Eagle Point Credit 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.

Institutional and Insider Ownership

19.5% of Eagle Point Credit shares are owned by institutional investors. 0.3% of Eagle Point Credit shares are owned by company insiders. Comparatively, 0.6% of Bain Capital Specialty Finance 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.

Profitability

This table compares Eagle Point Credit and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Point Credit	-84.29%	-1.83%	-0.99%
Bain Capital Specialty Finance	24.22%	10.40%	4.33%

Analyst Ratings

This is a summary of current recommendations for Eagle Point Credit and Bain Capital Specialty Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Point Credit	0	2	2	0	2.50
Bain Capital Specialty Finance	1	3	0	0	1.75

Eagle Point Credit presently has a consensus target price of $4.62, suggesting a potential upside of 40.79%. Bain Capital Specialty Finance has a consensus target price of $12.60, suggesting a potential upside of 16.18%. Given Eagle Point Credit’s stronger consensus rating and higher possible upside, analysts plainly believe Eagle Point Credit is more favorable than Bain Capital Specialty Finance.

Dividends

Eagle Point Credit pays an annual dividend of $1.26 per share and has a dividend yield of 38.4%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 15.5%. Eagle Point Credit pays out 206.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance pays out 169.7% 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 raised its dividend for 4 consecutive years.

Risk & Volatility

Eagle Point Credit has a beta of 0.38, meaning that its stock price is 62% less volatile than the S&P 500. Comparatively, Bain Capital Specialty Finance has a beta of 0.6, meaning that its stock price is 40% less volatile than the S&P 500.

Summary

Bain Capital Specialty Finance beats Eagle Point Credit on 12 of the 17 factors compared between the two stocks.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.

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.