Head to Head Review: Virtus Investment Partners (VRTS) and Triangle Capital (TCAP)

Virtus Investment Partners (NASDAQ: VRTS) and Triangle Capital (NYSE:TCAP) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, analyst recommendations, valuation, institutional ownership, risk, earnings and dividends.

Profitability

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This table compares Virtus Investment Partners and Triangle Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Virtus Investment Partners 8.70% 13.75% 3.03%
Triangle Capital -23.29% 10.67% 5.90%

Valuation & Earnings

This table compares Virtus Investment Partners and Triangle Capital’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Virtus Investment Partners $425.61 million 1.97 $37.01 million $7.68 15.08
Triangle Capital $123.00 million 4.58 -$28.65 million $1.55 7.57

Virtus Investment Partners has higher revenue and earnings than Triangle Capital. Triangle Capital is trading at a lower price-to-earnings ratio than Virtus Investment Partners, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Virtus Investment Partners has a beta of 1.65, suggesting that its stock price is 65% more volatile than the S&P 500. Comparatively, Triangle Capital has a beta of 0.77, suggesting that its stock price is 23% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Virtus Investment Partners and Triangle Capital, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Virtus Investment Partners 0 6 1 0 2.14
Triangle Capital 3 5 4 0 2.08

Virtus Investment Partners presently has a consensus target price of $138.00, suggesting a potential upside of 19.12%. Triangle Capital has a consensus target price of $15.42, suggesting a potential upside of 31.32%. Given Triangle Capital’s higher probable upside, analysts clearly believe Triangle Capital is more favorable than Virtus Investment Partners.

Dividends

Virtus Investment Partners pays an annual dividend of $1.80 per share and has a dividend yield of 1.6%. Triangle Capital pays an annual dividend of $1.20 per share and has a dividend yield of 10.2%. Virtus Investment Partners pays out 23.4% of its earnings in the form of a dividend. Triangle Capital pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

95.3% of Virtus Investment Partners shares are held by institutional investors. Comparatively, 45.4% of Triangle Capital shares are held by institutional investors. 4.8% of Virtus Investment Partners shares are held by company insiders. Comparatively, 3.5% of Triangle Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

Virtus Investment Partners beats Triangle Capital on 11 of the 16 factors compared between the two stocks.

Virtus Investment Partners Company Profile

Virtus Investment Partners, Inc. (Virtus) is a provider of investment management and related services to individuals and institutions. The Company provides its products in various forms and through multiple distribution channels. Its retail products include open-end mutual funds, closed-end funds, exchange traded funds, variable insurance funds, undertakings for collective investments in transferable securities (UCITS) and separately managed accounts. Its open-end mutual funds are distributed through intermediaries. Its closed-end funds trade on the New York Stock Exchange. Its variable insurance funds are available as investment options in variable annuities and life insurance products distributed by life insurance companies. Separately managed accounts consists of intermediary programs, sponsored and distributed by unaffiliated brokerage firms, and private client accounts, which are offered to the high net-worth clients of its affiliated managers.

Triangle Capital Company Profile

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic. The firm makes equity investments between $1 million and $25 million and debt investments between $5 million and $30 million per transaction, in companies having annual revenues between $20 million and $200 million and EBITDA between $3 million and $35 million and can also co-invest. It typically makes investments between $5 million and $35 million. It primarily invests in senior subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The firm also invests in senior debt securities secured by first lien security interests in portfolio companies. Triangle Capital Corporation was incorporated on October 10, 2006 and is based in Raleigh, North Carolina.

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