MSC Income Fund (NYSE:MSIF) & Main Street Capital (NYSE:MAIN) Critical Analysis

MSC Income Fund (NYSE:MSIF) and Main Street Capital (NYSE:MAIN) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, profitability, analyst recommendations, institutional ownership, dividends, valuation and risk.

Institutional and Insider Ownership

20.3% of Main Street Capital shares are held by institutional investors. 3.8% of Main Street Capital shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares MSC Income Fund and Main Street Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MSC Income Fund	N/A	N/A	N/A
Main Street Capital	78.49%	11.80%	6.32%

Analyst Ratings

This is a summary of current ratings and recommmendations for MSC Income Fund and Main Street Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MSC Income Fund	0	3	2	1	2.67
Main Street Capital	0	5	5	0	2.50

MSC Income Fund currently has a consensus price target of $13.88, indicating a potential upside of 16.55%. Main Street Capital has a consensus price target of $61.67, indicating a potential upside of 11.44%. Given MSC Income Fund’s stronger consensus rating and higher possible upside, equities analysts clearly believe MSC Income Fund is more favorable than Main Street Capital.

Valuation and Earnings

This table compares MSC Income Fund and Main Street Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MSC Income Fund	$110.26 million	5.09	-$155,544.55	($0.00)	-3,608.67
Main Street Capital	$566.39 million	9.14	$493.40 million	$4.96	11.16

Main Street Capital has higher revenue and earnings than MSC Income Fund. MSC Income Fund is trading at a lower price-to-earnings ratio than Main Street Capital, indicating that it is currently the more affordable of the two stocks.

Summary

Main Street Capital beats MSC Income Fund on 11 of the 14 factors compared between the two stocks.

About Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.