Blackrock Tcp Capital (NASDAQ:TCPC) versus Main Street Capital (NYSE:MAIN) Critical Review

Blackrock Tcp Capital (NASDAQ:TCPC) and Main Street Capital (NYSE:MAIN) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, dividends, risk, institutional ownership, profitability, valuation and earnings.

Earnings & Valuation

This table compares Blackrock Tcp Capital 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
Blackrock Tcp Capital	$201.79 million	1.65	-$88.93 million	($1.28)	-3.11
Main Street Capital	$566.39 million	9.10	$493.40 million	$4.96	11.11

Main Street Capital has higher revenue and earnings than Blackrock Tcp Capital. Blackrock Tcp Capital 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.

Institutional and Insider Ownership

20.3% of Main Street Capital shares are owned by institutional investors. 0.4% of Blackrock Tcp Capital shares are owned by company insiders. Comparatively, 3.8% of Main Street Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

Blackrock Tcp Capital pays an annual dividend of $0.68 per share and has a dividend yield of 17.1%. Main Street Capital pays an annual dividend of $3.18 per share and has a dividend yield of 5.8%. Blackrock Tcp Capital pays out -53.1% of its earnings in the form of a dividend. Main Street Capital pays out 64.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Main Street Capital has increased its dividend for 4 consecutive years. Blackrock Tcp Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Blackrock Tcp Capital and Main Street Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackrock Tcp Capital	2	2	0	0	1.50
Main Street Capital	0	5	5	0	2.50

Blackrock Tcp Capital currently has a consensus price target of $4.00, indicating a potential upside of 0.50%. Main Street Capital has a consensus price target of $61.67, indicating a potential upside of 11.91%. Given Main Street Capital’s stronger consensus rating and higher possible upside, analysts clearly believe Main Street Capital is more favorable than Blackrock Tcp Capital.

Volatility and Risk

Blackrock Tcp Capital has a beta of 0.98, meaning that its share price is 2% less volatile than the S&P 500. Comparatively, Main Street Capital has a beta of 0.72, meaning that its share price is 28% less volatile than the S&P 500.

Profitability

This table compares Blackrock Tcp Capital and Main Street Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackrock Tcp Capital	-61.27%	13.85%	5.28%
Main Street Capital	78.49%	11.80%	6.32%

Summary

Main Street Capital beats Blackrock Tcp Capital on 13 of the 17 factors compared between the two stocks.

About Blackrock Tcp Capital

BlackRock TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, small businesses, debt securities, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It typically invests in communication services, public relations services, television, wireless telecommunication services, apparel, textile mills, restaurants, retailing, energy, oil and gas extraction, Patent owners and Lessors, Federal and Federally- Sponsored Credit agencies, insurance, hospital and healthcare centers, Biotechnology, engineering services, heavy electrical equipment, tax accounting, scientific and related consulting services, charter freight air transportation, Information technology consulting, application hosting services, software diagram and design, computer aided design, communication equipment, electronics manufacturing equipment, computer components, chemicals. It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million including complex situations. It prefers to make equity investments in companies for an ownership stake.

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.