InvestcorpCreditManagementBDCInc . (NASDAQ:ICMB) and TPG Specialty Lending (NYSE:TSLX) are both small-cap finance companies, but which is the superior stock? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, risk, valuation, profitability and dividends.

Insider & Institutional Ownership

43.2% of InvestcorpCreditManagementBDCInc . shares are owned by institutional investors. Comparatively, 59.9% of TPG Specialty Lending shares are owned by institutional investors. 1.7% of InvestcorpCreditManagementBDCInc . shares are owned by insiders. Comparatively, 4.4% of TPG Specialty Lending shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for InvestcorpCreditManagementBDCInc . and TPG Specialty Lending, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
InvestcorpCreditManagementBDCInc . 0 0 1 0 3.00
TPG Specialty Lending 0 2 3 0 2.60

InvestcorpCreditManagementBDCInc . presently has a consensus target price of $9.00, indicating a potential upside of 240.91%. TPG Specialty Lending has a consensus target price of $22.67, indicating a potential upside of 81.04%. Given InvestcorpCreditManagementBDCInc .’s stronger consensus rating and higher possible upside, analysts clearly believe InvestcorpCreditManagementBDCInc . is more favorable than TPG Specialty Lending.

Profitability

This table compares InvestcorpCreditManagementBDCInc . and TPG Specialty Lending’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
InvestcorpCreditManagementBDCInc . -13.00% 9.53% 4.15%
TPG Specialty Lending 61.47% 11.65% 6.19%

Valuation & Earnings

This table compares InvestcorpCreditManagementBDCInc . and TPG Specialty Lending’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
InvestcorpCreditManagementBDCInc . $34.40 million 1.06 -$14.54 million $0.99 2.67
TPG Specialty Lending $251.49 million 3.32 $128.28 million $1.94 6.45

TPG Specialty Lending has higher revenue and earnings than InvestcorpCreditManagementBDCInc .. InvestcorpCreditManagementBDCInc . is trading at a lower price-to-earnings ratio than TPG Specialty Lending, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

InvestcorpCreditManagementBDCInc . has a beta of 1.13, suggesting that its stock price is 13% more volatile than the S&P 500. Comparatively, TPG Specialty Lending has a beta of 0.58, suggesting that its stock price is 42% less volatile than the S&P 500.

Dividends

InvestcorpCreditManagementBDCInc . pays an annual dividend of $1.00 per share and has a dividend yield of 37.9%. TPG Specialty Lending pays an annual dividend of $1.64 per share and has a dividend yield of 13.1%. InvestcorpCreditManagementBDCInc . pays out 101.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG Specialty Lending pays out 84.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG Specialty Lending has raised its dividend for 3 consecutive years.

Summary

TPG Specialty Lending beats InvestcorpCreditManagementBDCInc . on 13 of the 17 factors compared between the two stocks.

About InvestcorpCreditManagementBDCInc .

CM Finance Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, and recapitalization investments. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest in companies with EBITDA more than $15 million. The fund is based in New York, New York.

About TPG Specialty Lending

TPG Specialty Lending, Inc. is a business development company. The fund provides senior secured loans (first-lien, second-lien, and unitranche), mezzanine debt, non-control structured equity, and common equity with a focus on co-investments for organic growth, acquisitions, market or product expansion, restructuring initiatives, recapitalizations, and refinancing. The fund invests in business services, software & technology, healthcare, energy, consumer & retail, manufacturing, industrials, royalty related businesses, education, and specialty finance. It seeks to finance middle market companies principally located in the United States. The fund invests in companies with enterprise value between $50 million and $1 billion or more and EBITDA between $10 million and $250 million. The transaction size is between $15 million and $350 million. The fund invests across the spectrum of the capital structure and can arrange syndicated transactions of up to $500 million and hold sizeable positions within its credits.

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