Eagle Point Credit Company (NYSE: ECC) and Harvest Capital Credit Corporation (NASDAQ:HCAP) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their valuation, profitabiliy, institutional ownership, analyst recommendations, risk, earnings and dividends.

Profitability

This table compares Eagle Point Credit Company and Harvest Capital Credit Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Eagle Point Credit Company 159.47% N/A N/A
Harvest Capital Credit Corporation 42.18% 11.15% 6.63%

Dividends

Eagle Point Credit Company pays an annual dividend of $2.40 per share and has a dividend yield of 11.6%. Harvest Capital Credit Corporation pays an annual dividend of $1.35 per share and has a dividend yield of 9.6%. Eagle Point Credit Company pays out 39.2% of its earnings in the form of a dividend. Harvest Capital Credit Corporation pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit Company is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation & Earnings

This table compares Eagle Point Credit Company and Harvest Capital Credit Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Eagle Point Credit Company N/A N/A N/A $6.13 3.38
Harvest Capital Credit Corporation N/A N/A N/A $1.35 10.36

Eagle Point Credit Company is trading at a lower price-to-earnings ratio than Harvest Capital Credit Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Eagle Point Credit Company has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, Harvest Capital Credit Corporation has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500.

Insider and Institutional Ownership

58.8% of Eagle Point Credit Company shares are held by institutional investors. Comparatively, 7.5% of Harvest Capital Credit Corporation shares are held by institutional investors. 0.7% of Eagle Point Credit Company shares are held by insiders. Comparatively, 9.5% of Harvest Capital Credit Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Eagle Point Credit Company and Harvest Capital Credit Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Eagle Point Credit Company 0 1 4 0 2.80
Harvest Capital Credit Corporation 0 2 0 0 2.00

Eagle Point Credit Company currently has a consensus price target of $21.00, indicating a potential upside of 1.25%. Harvest Capital Credit Corporation has a consensus price target of $14.00, indicating a potential upside of 0.07%. Given Eagle Point Credit Company’s stronger consensus rating and higher probable upside, research analysts clearly believe Eagle Point Credit Company is more favorable than Harvest Capital Credit Corporation.

Summary

Eagle Point Credit Company beats Harvest Capital Credit Corporation on 8 of the 12 factors compared between the two stocks.

Eagle Point Credit Company Company Profile

Eagle Point Credit Company Inc. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to generate high current income, with a secondary objective to generate capital appreciation. The Company primarily invests in equity and junior debt tranches of collateralized loan obligations (CLOs) that are collateralized by a portfolio consisting primarily of the below investment grade United States senior secured loans. It may also invest in other securities and instruments related to these investments. The Company’s portfolio includes its investments in various industries, such as business equipment and services; healthcare; electronics/electrical; leisure goods/activities/movies; retailers (except food and drug); chemicals and plastics; telecommunications; financial intermediaries, and utilities. The Company’s advisor is Eagle Point Credit Management LLC.

Harvest Capital Credit Corporation Company Profile

Harvest Capital Credit Corporation is an externally managed, closed-end, non-diversified management investment company. The Company operates as a business development company and provides customized financing solutions for small to mid-sized companies. Its investment objective is to generate both current income and capital appreciation by making direct investments in the form of subordinated debt, senior debt, and to a lesser extent, minority equity investments in privately-held the United States small to mid-sized companies. Its investment portfolio includes over 56.8% of senior secured term loans, 40.8% of junior secured term loans, 1.3% of equity investments and 1.1% of collateralized loan obligation (CLO) equity at fair value. It may also invest in other investments, such as loans to larger, publicly-traded companies, high-yield bonds and distressed debt securities. It may also invest in debt and equity securities issued by CLO funds. HCAP Advisors LLC is its investment adviser.

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