Analyzing Medallion Financial (NASDAQ:MFIN) & Carlyle Secured Lending (NASDAQ:CGBD)

Medallion Financial (NASDAQ:MFIN) and Carlyle Secured Lending (NASDAQ:CGBD) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, risk, valuation, dividends, institutional ownership, profitability and analyst recommendations.

Volatility and Risk

Medallion Financial has a beta of 0.84, indicating that its share price is 16% less volatile than the S&P 500. Comparatively, Carlyle Secured Lending has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500.

Dividends

Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 5.1%. Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 13.8%. Medallion Financial pays out 27.0% of its earnings in the form of a dividend. Carlyle Secured Lending pays out 156.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

40.6% of Medallion Financial shares are owned by institutional investors. Comparatively, 24.5% of Carlyle Secured Lending shares are owned by institutional investors. 24.6% of Medallion Financial shares are owned by company insiders. Comparatively, 0.6% of Carlyle Secured Lending shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent ratings and target prices for Medallion Financial and Carlyle Secured Lending, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Medallion Financial	1	1	1	0	2.00
Carlyle Secured Lending	0	5	3	0	2.38

Medallion Financial presently has a consensus price target of $12.00, indicating a potential upside of 27.39%. Carlyle Secured Lending has a consensus price target of $13.20, indicating a potential upside of 14.09%. Given Medallion Financial’s higher probable upside, equities analysts plainly believe Medallion Financial is more favorable than Carlyle Secured Lending.

Earnings and Valuation

This table compares Medallion Financial and Carlyle Secured Lending”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Medallion Financial	$353.31 million	0.63	$43.04 million	$1.78	5.29
Carlyle Secured Lending	$80.99 million	10.10	$69.97 million	$1.02	11.34

Carlyle Secured Lending has lower revenue, but higher earnings than Medallion Financial. Medallion Financial is trading at a lower price-to-earnings ratio than Carlyle Secured Lending, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Medallion Financial and Carlyle Secured Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Medallion Financial	12.18%	9.38%	1.61%
Carlyle Secured Lending	27.38%	8.56%	3.90%

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.