BlackRock Capital Investment Corporation (NASDAQ: BKCC) and Solar Senior Capital (NASDAQ:SUNS) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, dividends, risk, profitabiliy and valuation.

Volatility & Risk

BlackRock Capital Investment Corporation has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Solar Senior Capital has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Insider and Institutional Ownership

31.7% of BlackRock Capital Investment Corporation shares are held by institutional investors. Comparatively, 32.6% of Solar Senior Capital shares are held by institutional investors. 1.3% of BlackRock Capital Investment Corporation shares are held by insiders. Comparatively, 5.6% of Solar Senior Capital shares are held by 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 Capital Investment Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 9.5%. Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 8.3%. BlackRock Capital Investment Corporation pays out -1,028.6% of its earnings in the form of a dividend. Solar Senior Capital pays out 94.6% 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 Capital Investment Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares BlackRock Capital Investment Corporation and Solar Senior Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BlackRock Capital Investment Corporation -5.04% 7.20% 4.51%
Solar Senior Capital 76.07% 7.98% 4.22%

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for BlackRock Capital Investment Corporation and Solar Senior Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlackRock Capital Investment Corporation 0 1 0 0 2.00
Solar Senior Capital 0 1 2 0 2.67

BlackRock Capital Investment Corporation currently has a consensus price target of $8.00, suggesting a potential upside of 5.82%. Solar Senior Capital has a consensus price target of $17.17, suggesting a potential upside of 1.22%. Given BlackRock Capital Investment Corporation’s higher possible upside, research analysts plainly believe BlackRock Capital Investment Corporation is more favorable than Solar Senior Capital.

Valuation and Earnings

This table compares BlackRock Capital Investment Corporation and Solar Senior Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BlackRock Capital Investment Corporation N/A N/A N/A ($0.07) -108.00
Solar Senior Capital N/A N/A N/A $1.49 11.38

BlackRock Capital Investment Corporation is trading at a lower price-to-earnings ratio than Solar Senior Capital, indicating that it is currently the more affordable of the two stocks.

Summary

Solar Senior Capital beats BlackRock Capital Investment Corporation on 7 of the 12 factors compared between the two stocks.

BlackRock Capital Investment Corporation 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.

Solar Senior Capital Company Profile

Solar Senior Capital Ltd. is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to seek to maximize current income consistent with the preservation of capital. The Company seeks to achieve its investment objective by directly and indirectly investing in senior loans, including first lien, unitranche, and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which it refers to collectively as senior loans. It may also invest in debt of public companies that are thinly traded or in equity securities. Under normal market conditions, at least 80% of the value of its net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. It invests in privately held the United States middle-market companies. Its investment activities are managed by Solar Capital Partners, LLC (Solar Capital Partners or the Investment Advisor).

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