Gladstone Capital (NASDAQ: GLAD) and TCP Capital (NASDAQ:TCPC) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, valuation, dividends, profitability, institutional ownership, risk and analyst recommendations.
Gladstone Capital pays an annual dividend of $0.84 per share and has a dividend yield of 9.4%. TCP Capital pays an annual dividend of $1.44 per share and has a dividend yield of 10.1%. Gladstone Capital pays out 93.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TCP Capital pays out 123.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a summary of recent ratings and recommmendations for Gladstone Capital and TCP Capital, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Gladstone Capital currently has a consensus price target of $9.16, indicating a potential upside of 2.37%. TCP Capital has a consensus price target of $17.67, indicating a potential upside of 23.54%. Given TCP Capital’s stronger consensus rating and higher probable upside, analysts clearly believe TCP Capital is more favorable than Gladstone Capital.
This table compares Gladstone Capital and TCP Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation and Earnings
This table compares Gladstone Capital and TCP Capital’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Gladstone Capital||$39.23 million||6.08||$17.18 million||$0.90||9.94|
|TCP Capital||$175.97 million||4.78||$90.61 million||$1.17||12.22|
TCP Capital has higher revenue and earnings than Gladstone Capital. Gladstone Capital is trading at a lower price-to-earnings ratio than TCP Capital, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Gladstone Capital has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500. Comparatively, TCP Capital has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.
Insider & Institutional Ownership
13.7% of Gladstone Capital shares are owned by institutional investors. Comparatively, 52.9% of TCP Capital shares are owned by institutional investors. 5.9% of Gladstone Capital shares are owned by company insiders. Comparatively, 0.6% of TCP Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
TCP Capital beats Gladstone Capital on 11 of the 16 factors compared between the two stocks.
Gladstone Capital Company Profile
Gladstone Capital Corporation is a closed-end, non-diversified management investment company, operating as a business development company (BDC). The objectives of the Company are to achieve and grow current income by investing in debt securities of established businesses that it believes will provide stable earnings and cash flow to pay expenses, make principal and interest payments on its outstanding indebtedness and make distributions to stockholders that grow over time, and to provide its stockholders with long-term capital appreciation in the value of its assets by investing in equity securities of established businesses that it believes can grow over time to permit it to sell its equity investments for capital gains. The Company is focused on investing in lower middle-market companies in the United States. It has investments in south, Midwest, west and northeast of the United States. Its portfolio allocation includes debt investments and equity investments.
TCP Capital Company Profile
TCP Capital Corp. is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. It invests in the debt of middle-market companies, as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. Its investments may include an equity component and may make equity investments directly. It intends to focus on privately negotiated investments in debt of middle-market companies. It may make investments of all kinds and at all levels of the capital structure, including in equity interests, such as preferred or common stock and warrants or options received in connection with its debt investments. As of December 31, 2016, its investment portfolio consisted of 90 portfolio companies. Tennenbaum Capital Partners, LLC is the investment manager and advisor of the Company.
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