FS Investment Corporation (NYSE: FSIC) and MCG Capital Corp (NASDAQ:MCGC) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, dividends, risk, profitabiliy, earnings and institutional ownership.

Analyst Recommendations

This is a breakdown of recent ratings and target prices for FS Investment Corporation and MCG Capital Corp, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
FS Investment Corporation 0 6 1 0 2.14
MCG Capital Corp 0 0 0 0 N/A

FS Investment Corporation presently has a consensus target price of $9.75, suggesting a potential upside of 7.14%. Given FS Investment Corporation’s higher probable upside, equities research analysts clearly believe FS Investment Corporation is more favorable than MCG Capital Corp.

Earnings and Valuation

This table compares FS Investment Corporation and MCG Capital Corp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
FS Investment Corporation N/A N/A N/A $1.52 5.99
MCG Capital Corp N/A N/A N/A N/A N/A

Institutional and Insider Ownership

32.8% of FS Investment Corporation shares are owned by institutional investors. 1.0% of FS Investment Corporation 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.

Profitability

This table compares FS Investment Corporation and MCG Capital Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
FS Investment Corporation 86.84% 9.44% 5.21%
MCG Capital Corp -9.19% -0.34% -0.33%

Dividends

FS Investment Corporation pays an annual dividend of $0.89 per share and has a dividend yield of 9.8%. MCG Capital Corp does not pay a dividend. FS Investment Corporation pays out 58.6% of its earnings in the form of a dividend.

Summary

FS Investment Corporation beats MCG Capital Corp on 8 of the 9 factors compared between the two stocks.

About FS Investment Corporation

FS Investment Corporation is an externally managed, non-diversified, closed-end management investment company. The Company’s investment objectives are to generate current income and long-term capital appreciation. Its portfolio consists primarily of investments in senior secured loans and second lien secured loans of the private United States middle market companies and subordinated loans of the private United States companies. It may purchase interests in loans or make other debt investments, including investments in senior secured bonds, through secondary market transactions in the over-the-counter market or directly from target companies as primary market or directly originated investments. It invests in a range of industries, including capital goods; consumer services; consumer durables and apparel; materials; commercial and professional services, and diversified financials. Its investment advisor is FB Income Advisor, LLC.

About MCG Capital Corp

PFLT Funding II, LLC, formerly MCG Capital Corporation, is a United States-based company. The Company provides products and services.

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