Critical Comparison: Prospect Capital Corporation (PSEC) vs. TICC Capital Corp. (TICC)
Prospect Capital Corporation (NASDAQ: PSEC) and TICC Capital Corp. (NASDAQ:TICC) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, institutional ownership, profitability, earnings, analyst recommendations, valuation and risk.
This is a breakdown of current ratings and recommmendations for Prospect Capital Corporation and TICC Capital Corp., as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Prospect Capital Corporation||1||3||0||0||1.75|
|TICC Capital Corp.||3||0||0||0||1.00|
Prospect Capital Corporation presently has a consensus price target of $6.83, suggesting a potential upside of 10.75%. TICC Capital Corp. has a consensus price target of $6.00, suggesting a potential downside of 9.91%. Given Prospect Capital Corporation’s stronger consensus rating and higher probable upside, equities analysts clearly believe Prospect Capital Corporation is more favorable than TICC Capital Corp..
Valuation and Earnings
This table compares Prospect Capital Corporation and TICC Capital Corp.’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Prospect Capital Corporation||N/A||N/A||N/A||$0.70||8.81|
|TICC Capital Corp.||$70.44 million||4.87||$91.12 million||$1.77||3.76|
TICC Capital Corp. has higher revenue and earnings than Prospect Capital Corporation. TICC Capital Corp. is trading at a lower price-to-earnings ratio than Prospect Capital Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares Prospect Capital Corporation and TICC Capital Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Prospect Capital Corporation||36.08%||8.98%||4.94%|
|TICC Capital Corp.||142.50%||7.50%||4.53%|
Risk and Volatility
Prospect Capital Corporation has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500. Comparatively, TICC Capital Corp. has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500.
Institutional and Insider Ownership
15.2% of Prospect Capital Corporation shares are held by institutional investors. Comparatively, 17.4% of TICC Capital Corp. shares are held by institutional investors. 7.1% of Prospect Capital Corporation shares are held by insiders. Comparatively, 5.9% of TICC Capital Corp. shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.
Prospect Capital Corporation pays an annual dividend of $0.72 per share and has a dividend yield of 11.7%. TICC Capital Corp. pays an annual dividend of $0.80 per share and has a dividend yield of 12.0%. Prospect Capital Corporation pays out 102.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TICC Capital Corp. pays out 45.2% of its earnings in the form of a dividend. TICC Capital Corp. is clearly the better dividend stock, given its higher yield and lower payout ratio.
TICC Capital Corp. beats Prospect Capital Corporation on 8 of the 13 factors compared between the two stocks.
Prospect Capital Corporation Company Profile
Prospect Capital Corporation is a financial services company. The Company primarily lends to and invests in middle market privately held companies. The Company is a closed-end investment company. Its investment objective is to generate both current income and long-term capital appreciation through debt and equity investments. The Company invests primarily in senior and subordinated debt and equity of private companies in need of capital for acquisitions, divestitures, growth, development, recapitalizations and other purposes. The Company makes investments, including lending in private equity sponsored transactions, lending directly to companies not owned by private equity firms, control investments in corporate operating companies, control investments in financial companies, investments in structured credit, real estate investments, investments in syndicated debt, aircraft leasing and online lending. The Company is managed by its investment advisor, Prospect Capital Management L.P.
TICC Capital Corp. Company Profile
TICC Capital Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its portfolio’s total return. The Company primarily focuses on seeking current income by investing primarily in corporate debt securities. The Company’s debt investments may include syndicated loans and bilateral loans. The Company holds interests in structured finance investments, including collateralized loan obligation (CLO) investment vehicles that own debt securities. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. The Company may also invest in publicly traded debt and/or equity securities. Its portfolio includes its investments in various industries, such as structured finance, telecommunication services, business services, printing and publishing, and financial intermediaries. TICC Management, LLC is its investment advisor.
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