Carlyle Secured Lending (NASDAQ:CGBD) and Blackrock Tcp Capital (NASDAQ:TCPC) Critical Analysis

Blackrock Tcp Capital (NASDAQ:TCPC) and Carlyle Secured Lending (NASDAQ:CGBD) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, profitability, valuation, earnings and analyst recommendations.

Analyst Recommendations

This is a summary of recent ratings for Blackrock Tcp Capital and Carlyle Secured Lending, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackrock Tcp Capital	2	1	0	0	1.33
Carlyle Secured Lending	2	3	2	0	2.00

Blackrock Tcp Capital currently has a consensus target price of $6.50, indicating a potential upside of 15.04%. Carlyle Secured Lending has a consensus target price of $14.33, indicating a potential upside of 23.14%. Given Carlyle Secured Lending’s stronger consensus rating and higher possible upside, analysts plainly believe Carlyle Secured Lending is more favorable than Blackrock Tcp Capital.

Volatility & Risk

Blackrock Tcp Capital has a beta of 1.03, indicating that its share price is 3% more volatile than the S&P 500. Comparatively, Carlyle Secured Lending has a beta of 0.87, indicating that its share price is 13% less volatile than the S&P 500.

Profitability

This table compares Blackrock Tcp Capital and Carlyle Secured Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackrock Tcp Capital	-4.98%	15.12%	6.14%
Carlyle Secured Lending	30.18%	9.24%	4.29%

Valuation & Earnings

This table compares Blackrock Tcp Capital and Carlyle Secured Lending”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackrock Tcp Capital	$4.60 million	104.21	-$63.14 million	($0.13)	-43.46
Carlyle Secured Lending	$232.59 million	2.55	$88.98 million	$1.18	9.86

Carlyle Secured Lending has higher revenue and earnings than Blackrock Tcp Capital. Blackrock Tcp Capital is trading at a lower price-to-earnings ratio than Carlyle Secured Lending, indicating that it is currently the more affordable of the two stocks.

Dividends

Blackrock Tcp Capital pays an annual dividend of $1.00 per share and has a dividend yield of 17.7%. Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 13.7%. Blackrock Tcp Capital pays out -769.2% of its earnings in the form of a dividend. Carlyle Secured Lending pays out 135.6% 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 Tcp Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Insider and Institutional Ownership

24.5% of Carlyle Secured Lending shares are owned by institutional investors. 0.2% of Blackrock Tcp Capital shares are owned by insiders. Comparatively, 0.6% of Carlyle Secured Lending 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.

Summary

Carlyle Secured Lending beats Blackrock Tcp Capital on 10 of the 16 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 Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.