THL Credit (NYSE: TPVG) and Triplepoint Venture Growth BDC (NYSE:TPVG) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, valuation, earnings, profitability, analyst recommendations, dividends and institutional ownership.

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for THL Credit and Triplepoint Venture Growth BDC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
THL Credit 0 4 0 0 2.00
Triplepoint Venture Growth BDC 0 2 1 0 2.33

THL Credit presently has a consensus target price of $10.00, indicating a potential upside of 23.15%. Triplepoint Venture Growth BDC has a consensus target price of $14.00, indicating a potential upside of 8.11%. Given THL Credit’s higher possible upside, analysts clearly believe THL Credit is more favorable than Triplepoint Venture Growth BDC.

Dividends

THL Credit pays an annual dividend of $1.08 per share and has a dividend yield of 13.3%. Triplepoint Venture Growth BDC pays an annual dividend of $1.44 per share and has a dividend yield of 11.1%. THL Credit pays out 89.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Triplepoint Venture Growth BDC pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. THL Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares THL Credit and Triplepoint Venture Growth BDC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
THL Credit $78.77 million 3.37 -$7.90 million $1.21 6.71
Triplepoint Venture Growth BDC $51.51 million 4.47 $19.22 million $1.61 8.04

Triplepoint Venture Growth BDC has lower revenue, but higher earnings than THL Credit. THL Credit is trading at a lower price-to-earnings ratio than Triplepoint Venture Growth BDC, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

THL Credit has a beta of 1.14, indicating that its stock price is 14% more volatile than the S&P 500. Comparatively, Triplepoint Venture Growth BDC has a beta of 1.23, indicating that its stock price is 23% more volatile than the S&P 500.

Profitability

This table compares THL Credit and Triplepoint Venture Growth BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
THL Credit -8.89% 11.15% 6.15%
Triplepoint Venture Growth BDC 47.08% 10.49% 4.90%

Insider and Institutional Ownership

40.2% of THL Credit shares are held by institutional investors. Comparatively, 38.3% of Triplepoint Venture Growth BDC shares are held by institutional investors. 0.5% of THL Credit shares are held by company insiders. Comparatively, 1.8% of Triplepoint Venture Growth BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Triplepoint Venture Growth BDC beats THL Credit on 9 of the 16 factors compared between the two stocks.

THL Credit Company Profile

THL Credit, Inc. is an externally managed, non-diversified closed-end management investment company. Its objective is to generate both current income and capital appreciation, through investments in privately negotiated debt and equity securities of lower middle market companies. The company was founded on May 26, 2009 and is headquartered in Boston, MA.

Triplepoint Venture Growth BDC Company Profile

TriplePoint Venture Growth BDC Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its total return to stockholders primarily in the form of current income and, to a lesser extent, capital appreciation by primarily lending with warrants to venture growth stage companies focused in technology, life sciences and other high growth industries, which are backed by TriplePoint Capital LLC’s (TPC) select group of venture capital investors. The Company targets investment opportunities in venture growth stage companies backed by venture capital investors. The Company originates and invests primarily in loans that have a secured collateral position and are used by venture growth stage companies to finance their continued expansion and growth, equipment financings and, on a select basis, revolving loans. The Company is managed by TPVG Advisers LLC.

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