Critical Contrast: MidCap Financial Investment (NASDAQ:MFIC) & Blackstone (NYSE:BX)

Blackstone (NYSE:BX) and MidCap Financial Investment (NASDAQ:MFIC) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, profitability, analyst recommendations, valuation, dividends, risk and institutional ownership.

Analyst Recommendations

This is a summary of current ratings for Blackstone and MidCap Financial Investment, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackstone	0	11	13	0	2.54
MidCap Financial Investment	1	6	2	0	2.11

Blackstone presently has a consensus target price of $149.43, suggesting a potential upside of 19.18%. MidCap Financial Investment has a consensus target price of $11.11, suggesting a potential upside of 22.73%. Given MidCap Financial Investment’s higher probable upside, analysts clearly believe MidCap Financial Investment is more favorable than Blackstone.

Valuation and Earnings

This table compares Blackstone and MidCap Financial Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackstone	$14.45 billion	6.51	$3.02 billion	$4.47	28.05
MidCap Financial Investment	$320.88 million	2.32	$63.17 million	($0.36)	-25.14

Blackstone has higher revenue and earnings than MidCap Financial Investment. MidCap Financial Investment is trading at a lower price-to-earnings ratio than Blackstone, indicating that it is currently the more affordable of the two stocks.

Dividends

Blackstone pays an annual dividend of $5.16 per share and has a dividend yield of 4.1%. MidCap Financial Investment pays an annual dividend of $1.24 per share and has a dividend yield of 13.7%. Blackstone pays out 115.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MidCap Financial Investment pays out -344.4% of its earnings in the form of a dividend. MidCap Financial Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

70.0% of Blackstone shares are held by institutional investors. Comparatively, 28.4% of MidCap Financial Investment shares are held by institutional investors. 1.0% of Blackstone shares are held by insiders. Comparatively, 0.9% of MidCap Financial Investment shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Blackstone and MidCap Financial Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackstone	21.84%	23.77%	10.06%
MidCap Financial Investment	-9.85%	11.17%	4.41%

Volatility & Risk

Blackstone has a beta of 1.56, indicating that its stock price is 56% more volatile than the S&P 500. Comparatively, MidCap Financial Investment has a beta of 0.61, indicating that its stock price is 39% less volatile than the S&P 500.

Summary

Blackstone beats MidCap Financial Investment on 13 of the 16 factors compared between the two stocks.

About Blackstone

Blackstone Inc. is an alternative asset management firm specializing in real estate, private equity, hedge fund solutions, credit, secondary funds of funds, public debt and equity and multi-asset class strategies. The firm typically invests in early-stage companies. It also provide capital markets services. The real estate segment specializes in opportunistic, core+ investments as well as debt investment opportunities collateralized by commercial real estate, and stabilized income-oriented commercial real estate across North America, Europe and Asia. The firm's corporate private equity business pursues transactions throughout the world across a variety of transaction types, including large buyouts,special situations, distressed mortgage loans, mid-cap buyouts, buy and build platforms, which involves multiple acquisitions behind a single management team and platform, and growth equity/development projects involving significant majority stakes in portfolio companies and minority investments in operating companies, shipping, real estate, corporate or consumer loans, and alternative energy greenfield development projects in energy and power, property, dislocated markets, shipping opportunities, financial institution breakups, re-insurance, and improving freight mobility, financial services, healthcare, life sciences, infrastructure, enterprise tech and consumer, as well as consumer technologies. The firm considers investment in Asia and Latin America. It seeks to invest between $0.25 million and $900 million per transaction. It invests in companies with enterprise value between $500 million and $5000 million. It has a three year investment period. Its hedge fund business manages a broad range of commingled and customized fund solutions and its credit business focuses on loans, and securities of non-investment grade companies spread across the capital structure including senior debt, subordinated debt, preferred stock and common equity. Blackstone Inc. was founded in 1985 and is headquartered in New York, New York with additional offices across Asia, Europe, North America and Central America.

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.