Analyzing TCG BDC (CGBD) and Federal Agricultural Mortgage (NYSE:AGM.A)

TCG BDC (NASDAQ: CGBD) and Federal Agricultural Mortgage (NYSE:AGM.A) are both small-cap financials companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Profitability

This table compares TCG BDC and Federal Agricultural Mortgage’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
TCG BDC 50.18% 8.82% 4.94%
Federal Agricultural Mortgage 20.84% 15.36% 0.50%

Insider & Institutional Ownership

9.1% of TCG BDC shares are held by institutional investors. 0.1% of TCG BDC shares are held by 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

TCG BDC pays an annual dividend of $1.48 per share and has a dividend yield of 8.1%. Federal Agricultural Mortgage does not pay a dividend. TCG BDC pays out 94.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares TCG BDC and Federal Agricultural Mortgage’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TCG BDC $110.97 million 10.24 $69.80 million $1.56 11.71
Federal Agricultural Mortgage N/A N/A N/A $7.43 10.03

TCG BDC has higher revenue and earnings than Federal Agricultural Mortgage. Federal Agricultural Mortgage is trading at a lower price-to-earnings ratio than TCG BDC, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for TCG BDC and Federal Agricultural Mortgage, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TCG BDC 0 0 4 0 3.00
Federal Agricultural Mortgage 0 0 0 0 N/A

TCG BDC currently has a consensus target price of $19.13, suggesting a potential upside of 4.74%. Given TCG BDC’s higher probable upside, equities research analysts plainly believe TCG BDC is more favorable than Federal Agricultural Mortgage.

Summary

TCG BDC beats Federal Agricultural Mortgage on 9 of the 12 factors compared between the two stocks.

TCG BDC Company Profile

TCG BDC, Inc., formerly Carlyle GMS Finance, Inc., is a managed and non-diversified closed-end investment company. The Company is focused on lending to middle market companies. The Company’s investment objective is to generate current income and capital appreciation primarily through debt investments in the United States and middle market companies. The Company seeks to achieve its investment objective primarily through direct originations of secured debt, including first lien senior secured loans and second lien senior secured loans. The Company’s first lien senior secured loans include stand-alone first lien loans, first lien/last out loans, and unitranche loans. Second lien senior secured loans (Middle Market Senior Loans), with the balance of its assets invested yielding in higher investments include unsecured debt, mezzanine debt and investments in equities. The Company’s investment adviser is Carlyle GMS Investment Management L.L.C.

Federal Agricultural Mortgage Company Profile

Federal Agricultural Mortgage Corporation (Farmer Mac) provides a secondary market for a range of loans made to borrowers in rural America. The Company’s segments include Farm & Ranch, USDA Guarantees, Rural Utilities, Institutional Credit and Corporate. Its secondary market activities are purchasing eligible loans directly from lenders; providing advances against eligible loans by purchasing obligations secured by those loans; securitizing assets and guaranteeing the payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of eligible loans; and issuing long-term standby purchase commitments (LTSPCs) for eligible loans. The loans eligible for the secondary market provided by Farmer Mac include mortgage loans secured by first liens on agricultural real estate, including part-time farms and rural housing (comprising the assets eligible for the Farm & Ranch line of business).

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