BlackRock LT Municipal Advantage Trust (NYSE: BTA) and KCAP Financial (NASDAQ:KCAP) are both financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their risk, analyst recommendations, dividends, institutional ownership, valuation, earnings and profitability.

Profitability

This table compares BlackRock LT Municipal Advantage Trust and KCAP Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BlackRock LT Municipal Advantage Trust -45.66% -3.37% -2.00%
KCAP Financial 17.53% 7.44% 3.84%

Analyst Ratings

This is a summary of current ratings and price targets for BlackRock LT Municipal Advantage Trust and KCAP Financial, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlackRock LT Municipal Advantage Trust 2 5 7 0 2.36
KCAP Financial 0 1 1 0 2.50

BlackRock LT Municipal Advantage Trust presently has a consensus target price of $360.36, suggesting a potential upside of 2,801.43%. KCAP Financial has a consensus target price of $9.75, suggesting a potential upside of 177.78%. Given BlackRock LT Municipal Advantage Trust’s higher probable upside, research analysts plainly believe BlackRock LT Municipal Advantage Trust is more favorable than KCAP Financial.

Dividends

KCAP Financial pays an annual dividend of $0.48 per share and has a dividend yield of 13.7%. BlackRock LT Municipal Advantage Trust does not pay a dividend. KCAP Financial pays out 320.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

20.2% of KCAP Financial shares are held by institutional investors. 8.0% of KCAP Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings and Valuation

This table compares BlackRock LT Municipal Advantage Trust and KCAP Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
BlackRock LT Municipal Advantage Trust N/A N/A N/A N/A N/A
KCAP Financial $32.54 million 4.01 $5.58 million $0.15 23.40

KCAP Financial has higher revenue and earnings than BlackRock LT Municipal Advantage Trust.

Summary

KCAP Financial beats BlackRock LT Municipal Advantage Trust on 8 of the 11 factors compared between the two stocks.

About BlackRock LT Municipal Advantage Trust

BlackRock Long-Term Municipal Advantage Trust (the Trust) is a non-diversified, closed-end management investment company. The Trust’s investment objective is to provide current income exempt from regular federal income tax. The Trust seeks to achieve its investment objective by investing, under normal market conditions, at least 80% of its assets in municipal obligations and derivative instruments with exposure to such municipal obligations, in each case that are exempt from federal income tax (except that the interest may be subject to the federal alternative minimum tax). The Trust invests primarily in long-term municipal bonds with a maturity of more than 10 years at the time of investment. The Trust’s municipal bond portfolio will have a dollar-weighted average maturity of more than 10 years. The Trust may invest directly in such securities or synthetically through the use of derivatives. BlackRock Advisors, LLC is the investment manager of the Trust.

About KCAP Financial

KCAP Financial, Inc. is an internally managed, non-diversified closed-end investment company. The Company has approximately three principal areas of investments. First, the Company originates, structures and invests in senior secured term loans and mezzanine debt primarily in privately-held middle market companies (the debt securities portfolio). In addition, the Company may invest in the equity securities of privately held middle market companies. Second, the Company invests in asset management companies (the Asset Manager Affiliates) that manage collateralized loan obligation funds (CLO Funds). Third, the Company invests in debt and subordinated securities issued by CLOs (CLO fund securities). These CLO fund securities are primarily managed by its Asset Manager Affiliates, but from time-to-time the Company makes investments in CLO Fund Securities managed by other asset managers. The CLO funds typically invest in syndicated loans, high-yield bonds and other credit instruments.

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