Fifth Street Senior Floating Rate Corp. (NASDAQ: FSFR) and BlackRock Capital Investment Corporation (NASDAQ:BKCC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, profitability, risk, earnings, valuation and institutional ownership.

Risk & Volatility

Fifth Street Senior Floating Rate Corp. has a beta of 0.33, indicating that its stock price is 67% less volatile than the S&P 500. Comparatively, BlackRock Capital Investment Corporation has a beta of 0.85, indicating that its stock price is 15% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for Fifth Street Senior Floating Rate Corp. and BlackRock Capital Investment Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fifth Street Senior Floating Rate Corp. 0 2 0 0 2.00
BlackRock Capital Investment Corporation 0 1 0 0 2.00

Fifth Street Senior Floating Rate Corp. currently has a consensus price target of $9.25, suggesting a potential upside of 4.17%. BlackRock Capital Investment Corporation has a consensus price target of $8.00, suggesting a potential upside of 10.34%. Given BlackRock Capital Investment Corporation’s higher possible upside, analysts clearly believe BlackRock Capital Investment Corporation is more favorable than Fifth Street Senior Floating Rate Corp..

Institutional and Insider Ownership

23.3% of Fifth Street Senior Floating Rate Corp. shares are owned by institutional investors. Comparatively, 29.0% of BlackRock Capital Investment Corporation shares are owned by institutional investors. 0.4% of Fifth Street Senior Floating Rate Corp. shares are owned by company insiders. Comparatively, 1.3% of BlackRock Capital Investment Corporation shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Profitability

This table compares Fifth Street Senior Floating Rate Corp. and BlackRock Capital Investment Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fifth Street Senior Floating Rate Corp. 29.89% 7.27% 3.83%
BlackRock Capital Investment Corporation -5.04% 7.20% 4.51%

Dividends

Fifth Street Senior Floating Rate Corp. pays an annual dividend of $0.76 per share and has a dividend yield of 8.6%. BlackRock Capital Investment Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 9.9%. Fifth Street Senior Floating Rate Corp. pays out 161.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BlackRock Capital Investment Corporation pays out -1,028.6% of its earnings in the form of a dividend. BlackRock Capital Investment Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares Fifth Street Senior Floating Rate Corp. and BlackRock Capital Investment Corporation’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fifth Street Senior Floating Rate Corp. N/A N/A N/A $0.47 18.89
BlackRock Capital Investment Corporation N/A N/A N/A ($0.07) -103.57

BlackRock Capital Investment Corporation is trading at a lower price-to-earnings ratio than Fifth Street Senior Floating Rate Corp., indicating that it is currently the more affordable of the two stocks.

Summary

BlackRock Capital Investment Corporation beats Fifth Street Senior Floating Rate Corp. on 8 of the 11 factors compared between the two stocks.

About Fifth Street Senior Floating Rate Corp.

Fifth Street Senior Floating Rate Corp. is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in portfolio companies primarily in the form of senior loans. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. Fifth Street Management LLC is the investment advisor of the Company.

About BlackRock Capital Investment Corporation

BlackRock Capital Investment Corporation is an externally-managed, non-diversified, closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation through its debt and equity investments. The Company provides middle-market companies with a range of financing solutions, including senior and junior secured, unsecured and subordinated debt securities and loans, and equity securities. Its targeted investment typically ranges between $10 million and $50 million. The Company generally seeks to invest in companies that operate in a range of industries. The Company’s investments are in senior and junior secured, unsecured and subordinated loans to the United States private and certain public middle-market companies. The Company’s investment advisor is BlackRock Advisors, LLC.

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