Head to Head Comparison: Mercury General (NYSE:MCY) versus BlackRock TCP Capital (NASDAQ:TCPC)

BlackRock TCP Capital (NASDAQ:TCPC) and Mercury General (NYSE:MCY) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, profitability, valuation and risk.

Volatility & Risk

BlackRock TCP Capital has a beta of 1.43, suggesting that its stock price is 43% more volatile than the S&P 500. Comparatively, Mercury General has a beta of 0.8, suggesting that its stock price is 20% less volatile than the S&P 500.

Valuation & Earnings

This table compares BlackRock TCP Capital and Mercury General’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	$50.67 million	11.50	$38.47 million	$0.66	15.29
Mercury General	$4.63 billion	0.62	$96.34 million	$1.74	29.69

Mercury General has higher revenue and earnings than BlackRock TCP Capital. BlackRock TCP Capital is trading at a lower price-to-earnings ratio than Mercury General, indicating that it is currently the more affordable of the two stocks.

Dividends

BlackRock TCP Capital pays an annual dividend of $1.36 per share and has a dividend yield of 13.5%. Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 2.5%. BlackRock TCP Capital pays out 206.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Mercury General pays out 73.0% of its earnings in the form of a dividend. BlackRock TCP Capital has increased its dividend for 2 consecutive years. BlackRock TCP Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares BlackRock TCP Capital and Mercury General’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
BlackRock TCP Capital	18.38%	14.59%	6.09%
Mercury General	2.08%	1.17%	0.25%

Institutional & Insider Ownership

42.4% of Mercury General shares are held by institutional investors. 0.2% of BlackRock TCP Capital shares are held by company insiders. Comparatively, 35.5% of Mercury General shares are held by company 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 breakdown of current ratings and recommmendations for BlackRock TCP Capital and Mercury General, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
BlackRock TCP Capital	0	5	0	0	2.00
Mercury General	0	0	1	0	3.00

BlackRock TCP Capital currently has a consensus price target of $11.25, suggesting a potential upside of 11.50%. Mercury General has a consensus price target of $33.00, suggesting a potential downside of 36.12%. Given BlackRock TCP Capital’s higher probable upside, equities analysts plainly believe BlackRock TCP Capital is more favorable than Mercury General.

Summary

Mercury General beats BlackRock TCP Capital on 9 of the 17 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 Mercury General

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.