Analyzing BlackRock Inv. Quality Munic. Trust (BKN) & Solar Capital (SLRC)

BlackRock Inv. Quality Munic. Trust (NYSE:BKN) and Solar Capital (NASDAQ:SLRC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their risk, valuation, dividends, institutional ownership, analyst recommendations, earnings and profitability.

Risk and Volatility

BlackRock Inv. Quality Munic. Trust has a beta of 0.12, indicating that its stock price is 88% less volatile than the S&P 500. Comparatively, Solar Capital has a beta of 0.73, indicating that its stock price is 27% less volatile than the S&P 500.

Insider and Institutional Ownership

18.8% of BlackRock Inv. Quality Munic. Trust shares are owned by institutional investors. Comparatively, 57.5% of Solar Capital shares are owned by institutional investors. 5.9% of Solar Capital shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for BlackRock Inv. Quality Munic. Trust and Solar Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlackRock Inv. Quality Munic. Trust 0 0 0 0 N/A
Solar Capital 0 1 3 0 2.75

Solar Capital has a consensus target price of $22.38, indicating a potential upside of 5.24%. Given Solar Capital’s higher probable upside, analysts clearly believe Solar Capital is more favorable than BlackRock Inv. Quality Munic. Trust.

Profitability

This table compares BlackRock Inv. Quality Munic. Trust and Solar Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BlackRock Inv. Quality Munic. Trust N/A N/A N/A
Solar Capital 46.58% 8.05% 4.38%

Dividends

BlackRock Inv. Quality Munic. Trust pays an annual dividend of $0.68 per share and has a dividend yield of 4.6%. Solar Capital pays an annual dividend of $1.64 per share and has a dividend yield of 7.7%. Solar Capital pays out 92.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares BlackRock Inv. Quality Munic. Trust and Solar Capital’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BlackRock Inv. Quality Munic. Trust N/A N/A N/A N/A N/A
Solar Capital $153.53 million 5.85 $66.87 million $1.77 12.01

Solar Capital has higher revenue and earnings than BlackRock Inv. Quality Munic. Trust.

Summary

Solar Capital beats BlackRock Inv. Quality Munic. Trust on 10 of the 11 factors compared between the two stocks.

About BlackRock Inv. Quality Munic. Trust

BlackRock Investment Quality Municipal Trust Inc. is a closed ended fixed income mutual fund launched by BlackRock, Inc. It is managed by BlackRock Advisors, LLC. The fund invests in fixed income markets. It invests primarily in investment grade municipal bonds municipal obligations exempt from federal income taxes. Blackrock Investment Quality Municipal Trust Inc. was formed on February 28, 1993 and is domiciled in United States.

About Solar Capital

Solar Capital Ltd. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate sctivities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities. It also invests in life sciences with focus on specialty pharmaceuticals, medical devices, biotech, health Care Providers and services; health Care technology, enabling technologies and tools. The fund primarily invests in United States. The fund's investments generally range between $5 million and $100 million. The fund invests in companies with revenues between $50 million and $1 billion and EBITDA between $15 million and $100 million. It invests in the form of senior secured loans, mezzanine loans, and equity securities. It may also seek investments in thinly traded public companies and also make secondary investments. The fund makes non-control equity investments. It primarily exits within three years of the initial capital commitment.

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