Head to Head Review: TCP Capital Corp. (TCPC) vs. TPG Specialty Lending (TSLX)
TCP Capital Corp. (NASDAQ: TCPC) and TPG Specialty Lending (NYSE:TSLX) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.
Risk & Volatility
TCP Capital Corp. has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, TPG Specialty Lending has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.
Insider and Institutional Ownership
53.4% of TCP Capital Corp. shares are held by institutional investors. Comparatively, 63.0% of TPG Specialty Lending shares are held by institutional investors. 0.6% of TCP Capital Corp. shares are held by company insiders. Comparatively, 4.8% of TPG Specialty Lending shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares TCP Capital Corp. and TPG Specialty Lending’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|TCP Capital Corp.||N/A||N/A||N/A||$1.55||10.34|
|TPG Specialty Lending||N/A||N/A||N/A||$2.17||9.42|
TPG Specialty Lending is trading at a lower price-to-earnings ratio than TCP Capital Corp., indicating that it is currently the more affordable of the two stocks.
This table compares TCP Capital Corp. and TPG Specialty Lending’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|TCP Capital Corp.||54.74%||12.93%||7.29%|
|TPG Specialty Lending||60.77%||12.68%||7.41%|
This is a breakdown of current recommendations and price targets for TCP Capital Corp. and TPG Specialty Lending, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|TCP Capital Corp.||0||0||6||0||3.00|
|TPG Specialty Lending||0||2||2||0||2.50|
TCP Capital Corp. currently has a consensus target price of $18.25, indicating a potential upside of 13.85%. TPG Specialty Lending has a consensus target price of $20.25, indicating a potential downside of 0.93%. Given TCP Capital Corp.’s stronger consensus rating and higher probable upside, equities analysts clearly believe TCP Capital Corp. is more favorable than TPG Specialty Lending.
TCP Capital Corp. pays an annual dividend of $1.44 per share and has a dividend yield of 9.0%. TPG Specialty Lending pays an annual dividend of $1.56 per share and has a dividend yield of 7.6%. TCP Capital Corp. pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TPG Specialty Lending pays out 71.9% of its earnings in the form of a dividend.
About TCP Capital Corp.
TCP Capital Corp. is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. It invests in the debt of middle-market companies, as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. Its investments may include an equity component and may make equity investments directly. It intends to focus on privately negotiated investments in debt of middle-market companies. It may make investments of all kinds and at all levels of the capital structure, including in equity interests, such as preferred or common stock and warrants or options received in connection with its debt investments. As of December 31, 2016, its investment portfolio consisted of 90 portfolio companies. Tennenbaum Capital Partners, LLC is the investment manager and advisor of the Company.
About TPG Specialty Lending
TPG Specialty Lending, Inc. is an externally managed, closed-end, non-diversified management investment company. The Company is a specialty finance company focused on lending to middle-market companies. It seeks to generate current income primarily in the United States-domiciled middle-market companies through direct originations of senior secured loans and originations of mezzanine and unsecured loans and investments in corporate bonds and equity securities. The Company invests in first-lien debt, second-lien debt, mezzanine and unsecured debt and equity and other investments. Its first-lien debt may include standalone first-lien loans; last out first-lien loans; unitranche loans and secured corporate bonds. Its second-lien debt may include secured loans and secured corporate bonds, with a secondary priority behind first-lien debt. As of December 31, 2016, the Company’s portfolio was invested across 19 different industries. The Company’s investment advisor is TSL Advisers, LLC.
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