MidCap Financial Investment (NASDAQ:MFIC – Get Free Report) and Crescent Capital BDC (NASDAQ:CCAP – Get Free Report) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, profitability, risk, earnings and valuation.
Risk and Volatility
MidCap Financial Investment has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, Crescent Capital BDC has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500.
Profitability
This table compares MidCap Financial Investment and Crescent Capital BDC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| MidCap Financial Investment | -9.85% | 11.17% | 4.41% |
| Crescent Capital BDC | -2.02% | 9.02% | 3.82% |
Earnings and Valuation
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| MidCap Financial Investment | $320.88 million | 2.19 | $63.17 million | ($0.36) | -23.69 |
| Crescent Capital BDC | $167.29 million | 2.00 | $34.51 million | ($0.09) | -101.00 |
MidCap Financial Investment has higher revenue and earnings than Crescent Capital BDC. Crescent Capital BDC is trading at a lower price-to-earnings ratio than MidCap Financial Investment, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a breakdown of recent ratings and price targets for MidCap Financial Investment and Crescent Capital BDC, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| MidCap Financial Investment | 1 | 6 | 1 | 0 | 2.00 |
| Crescent Capital BDC | 0 | 6 | 1 | 0 | 2.14 |
MidCap Financial Investment currently has a consensus target price of $10.71, indicating a potential upside of 25.54%. Crescent Capital BDC has a consensus target price of $12.62, indicating a potential upside of 38.89%. Given Crescent Capital BDC’s stronger consensus rating and higher possible upside, analysts plainly believe Crescent Capital BDC is more favorable than MidCap Financial Investment.
Institutional and Insider Ownership
28.4% of MidCap Financial Investment shares are owned by institutional investors. Comparatively, 49.5% of Crescent Capital BDC shares are owned by institutional investors. 0.9% of MidCap Financial Investment shares are owned by company insiders. Comparatively, 1.2% of Crescent Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Dividends
MidCap Financial Investment pays an annual dividend of $1.24 per share and has a dividend yield of 14.5%. Crescent Capital BDC pays an annual dividend of $1.36 per share and has a dividend yield of 15.0%. MidCap Financial Investment pays out -344.4% of its earnings in the form of a dividend. Crescent Capital BDC pays out -1,511.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Crescent Capital BDC has increased its dividend for 1 consecutive years. Crescent Capital BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Summary
Crescent Capital BDC beats MidCap Financial Investment on 9 of the 16 factors compared between the two stocks.
About MidCap Financial Investment
MidCap Financial Investment Corporation (Former name 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 and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.
About Crescent Capital BDC
Crescent Capital BDC, Inc. is as a business development company private equity / buyouts and loan fund. It specializes in directly investing. It specializes in middle market. The fund seeks to invest in United States.
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