Critical Comparison: Moody’s (NYSE:MCO) vs. Blackrock Tcp Capital (NASDAQ:TCPC)

Moody’s (NYSE:MCO) and Blackrock Tcp Capital (NASDAQ:TCPC) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, earnings, analyst recommendations, dividends, valuation, institutional ownership and profitability.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Moody’s	34.25%	80.35%	19.38%
Blackrock Tcp Capital	-61.27%	13.85%	5.28%

Valuation & Earnings

This table compares Moody’s and Blackrock Tcp Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moody’s	$7.72 billion	10.20	$2.46 billion	$15.77	28.83
Blackrock Tcp Capital	$201.79 million	1.70	-$88.93 million	($1.28)	-3.19

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

Insider and Institutional Ownership

92.1% of Moody’s shares are owned by institutional investors. 0.1% of Moody’s shares are owned by company insiders. Comparatively, 0.4% of Blackrock Tcp Capital shares are owned by company 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

Moody’s pays an annual dividend of $4.12 per share and has a dividend yield of 0.9%. Blackrock Tcp Capital pays an annual dividend of $0.68 per share and has a dividend yield of 16.7%. Moody’s pays out 26.1% of its earnings in the form of a dividend. Blackrock Tcp Capital pays out -53.1% 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. Moody’s has raised its dividend for 16 consecutive years. Blackrock Tcp Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Moody’s and Blackrock Tcp Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	5	14	1	2.80
Blackrock Tcp Capital	1	3	0	0	1.75

Moody’s presently has a consensus price target of $553.61, suggesting a potential upside of 21.79%. Blackrock Tcp Capital has a consensus price target of $4.00, suggesting a potential downside of 1.96%. Given Moody’s’ stronger consensus rating and higher probable upside, analysts clearly believe Moody’s is more favorable than Blackrock Tcp Capital.

Volatility & Risk

Moody’s has a beta of 1.34, indicating that its stock price is 34% more volatile than the S&P 500. Comparatively, Blackrock Tcp Capital has a beta of 0.98, indicating that its stock price is 2% less volatile than the S&P 500.

Summary

Moody’s beats Blackrock Tcp Capital on 15 of the 18 factors compared between the two stocks.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.

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.