Financial Comparison: Alcentra Capital (ABDC) & Blackrock Capital Investment (BKCC)

Alcentra Capital (NASDAQ: ABDC) and Blackrock Capital Investment (NASDAQ:BKCC) are both small-cap financials companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, risk, analyst recommendations, dividends, institutional ownership, valuation and profitability.

Profitability

This table compares Alcentra Capital and Blackrock Capital Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Alcentra Capital -2.25% 11.32% 7.03%
Blackrock Capital Investment 19.87% 9.67% 6.19%

Valuation and Earnings

This table compares Alcentra Capital and Blackrock Capital Investment’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Alcentra Capital $40.60 million 2.94 $8.78 million $0.48 17.48
Blackrock Capital Investment $117.44 million 3.80 -$84.29 million $0.24 25.42

Alcentra Capital has higher earnings, but lower revenue than Blackrock Capital Investment. Alcentra Capital is trading at a lower price-to-earnings ratio than Blackrock Capital Investment, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

32.1% of Alcentra Capital shares are owned by institutional investors. Comparatively, 31.1% of Blackrock Capital Investment shares are owned by institutional investors. 5.0% of Alcentra Capital shares are owned by company insiders. Comparatively, 1.3% of Blackrock Capital Investment shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings and recommmendations for Alcentra Capital and Blackrock Capital Investment, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Alcentra Capital 2 1 1 0 1.75
Blackrock Capital Investment 0 2 0 0 2.00

Alcentra Capital presently has a consensus price target of $12.83, indicating a potential upside of 52.96%. Blackrock Capital Investment has a consensus price target of $7.25, indicating a potential upside of 18.85%. Given Alcentra Capital’s higher possible upside, research analysts clearly believe Alcentra Capital is more favorable than Blackrock Capital Investment.

Risk & Volatility

Alcentra Capital has a beta of 0.62, meaning that its stock price is 38% less volatile than the S&P 500. Comparatively, Blackrock Capital Investment has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Dividends

Alcentra Capital pays an annual dividend of $1.00 per share and has a dividend yield of 11.9%. Blackrock Capital Investment pays an annual dividend of $0.72 per share and has a dividend yield of 11.8%. Alcentra Capital pays out 208.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blackrock Capital Investment pays out 300.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Alcentra Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Alcentra Capital beats Blackrock Capital Investment on 10 of the 16 factors compared between the two stocks.

Alcentra Capital Company Profile

Alcentra Capital Corporation is a specialty finance company that operates as a non-diversified, closed-end management investment company. The Company operates as a business development company and a regulated investment company. It provides customized debt and equity financing solutions to lower middle-market companies, which are companies having annual earnings, before interest, taxes, depreciation and amortization of between $5 million and $15 million, and/or revenues of between $10 million and $100 million. Its investments range in size from $5 million to $15 million. Its investment objective is to generate both current income and capital appreciation primarily by making direct investments in lower middle-market companies in the form of senior debt, unitranche, second lien, subordinated debt and, to a lesser extent, senior debt and minority equity investments. Its investment focus is to make loans to, and selected equity investments in, privately-held lower-middle-market companies.

Blackrock Capital Investment Company Profile

BlackRock Capital Investment Corporation is an externally-managed, non-diversified, closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation through its debt and equity investments. The Company provides middle-market companies with a range of financing solutions, including senior and junior secured, unsecured and subordinated debt securities and loans, and equity securities. Its targeted investment typically ranges between $10 million and $50 million. The Company generally seeks to invest in companies that operate in a range of industries. The Company’s investments are in senior and junior secured, unsecured and subordinated loans to the United States private and certain public middle-market companies. The Company’s investment advisor is BlackRock Advisors, LLC.

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