Critical Analysis: OFS Capital Corporation (OFS) & TICC Capital Corp. (TICC)
OFS Capital Corporation (NASDAQ: OFS) and TICC Capital Corp. (NASDAQ:TICC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their dividends, institutional ownership, earnings, valuation, profitability, analyst recommendations and risk.
Risk & Volatility
OFS Capital Corporation has a beta of 0.47, suggesting that its stock price is 53% less volatile than the S&P 500. Comparatively, TICC Capital Corp. has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500.
Valuation & Earnings
This table compares OFS Capital Corporation and TICC Capital Corp.’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|OFS Capital Corporation||$31.09 million||5.19||$13.82 million||$0.92||13.15|
|TICC Capital Corp.||$69.28 million||4.60||$110.36 million||$1.05||5.90|
TICC Capital Corp. has higher revenue and earnings than OFS Capital Corporation. TICC Capital Corp. is trading at a lower price-to-earnings ratio than OFS Capital Corporation, indicating that it is currently the more affordable of the two stocks.
OFS Capital Corporation pays an annual dividend of $1.36 per share and has a dividend yield of 11.2%. TICC Capital Corp. pays an annual dividend of $0.80 per share and has a dividend yield of 12.9%. OFS Capital Corporation pays out 147.8% 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 76.2% 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. is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares OFS Capital Corporation and TICC Capital Corp.’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|OFS Capital Corporation||25.74%||9.43%||4.79%|
|TICC Capital Corp.||94.98%||7.64%||4.95%|
Institutional and Insider Ownership
28.7% of OFS Capital Corporation shares are owned by institutional investors. Comparatively, 17.5% of TICC Capital Corp. shares are owned by institutional investors. 0.0% of OFS Capital Corporation shares are owned by company insiders. Comparatively, 5.9% of TICC Capital Corp. shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
This is a breakdown of current ratings and recommmendations for OFS Capital Corporation and TICC Capital Corp., as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|OFS Capital Corporation||0||1||3||0||2.75|
|TICC Capital Corp.||2||1||1||0||1.75|
OFS Capital Corporation presently has a consensus target price of $14.67, suggesting a potential upside of 21.21%. TICC Capital Corp. has a consensus target price of $5.50, suggesting a potential downside of 11.15%. Given OFS Capital Corporation’s stronger consensus rating and higher possible upside, equities analysts plainly believe OFS Capital Corporation is more favorable than TICC Capital Corp..
TICC Capital Corp. beats OFS Capital Corporation on 10 of the 16 factors compared between the two stocks.
OFS Capital Corporation Company Profile
OFS Capital Corporation (OFS Capital) is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to provide its shareholders with both current income and capital appreciation primarily through debt investments and equity investments. It focuses primarily on middle-market companies in the United States, including senior secured loans, including first-lien, second-lien and unitranche loans, as well as subordinated loans, and warrants and other minority equity securities. The Company may make investments directly or through OFS SBIC I, LP (SBIC I LP), its investment company subsidiary. It focuses on investments in loans, in which OFS Advisor’s investment professionals have expertise, including investments in first-lien, unitranche, second-lien, and mezzanine loans and, to a lesser extent, on warrants and other equity securities. The Company’s investment activities are managed by OFS Capital Management, LLC (OFS Advisor).
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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