Blackrock Capital Investment (NASDAQ: BKCC) and Hercules Capital (NYSE:HTGC) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.
Valuation & Earnings
This table compares Blackrock Capital Investment and Hercules Capital’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Blackrock Capital Investment||$117.44 million||3.84||-$84.29 million||$0.28||22.04|
|Hercules Capital||$175.05 million||6.25||$68.70 million||$0.91||14.27|
Risk & Volatility
Blackrock Capital Investment has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Hercules Capital has a beta of 0.87, meaning that its stock price is 13% less volatile than the S&P 500.
This is a breakdown of recent recommendations and price targets for Blackrock Capital Investment and Hercules Capital, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Blackrock Capital Investment||0||2||0||0||2.00|
Blackrock Capital Investment currently has a consensus price target of $7.25, indicating a potential upside of 17.50%. Hercules Capital has a consensus price target of $14.36, indicating a potential upside of 10.56%. Given Blackrock Capital Investment’s higher probable upside, analysts plainly believe Blackrock Capital Investment is more favorable than Hercules Capital.
Blackrock Capital Investment pays an annual dividend of $0.72 per share and has a dividend yield of 11.7%. Hercules Capital pays an annual dividend of $1.24 per share and has a dividend yield of 9.5%. Blackrock Capital Investment pays out 257.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hercules Capital pays out 136.3% 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 and Institutional Ownership
31.1% of Blackrock Capital Investment shares are owned by institutional investors. Comparatively, 38.8% of Hercules Capital shares are owned by institutional investors. 1.3% of Blackrock Capital Investment shares are owned by company insiders. Comparatively, 3.2% of Hercules Capital shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
This table compares Blackrock Capital Investment and Hercules Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Blackrock Capital Investment||19.87%||9.67%||6.19%|
Hercules Capital beats Blackrock Capital Investment on 13 of the 16 factors compared between the two stocks.
Blackrock Capital Investment Company Profile
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.
Hercules Capital Company Profile
Hercules Capital, Inc. is a specialty finance company. The Company is an internally managed, non-diversified, closed-end investment company. The Company focuses on providing senior secured venture growth loans to venture capital-backed companies in a range of technology, life sciences, and sustainable and renewable technology industries. The Company’s investment objective is to maximize its portfolio total return by generating current income from its debt investments and capital appreciation from its warrant and equity-related investments. The Company’s primary business objectives are to increase its net income, net operating income and net asset value (NAV) by investing in structured debt with warrants and equity of venture capital-backed companies in technology-related industries with attractive current yields and the potential for equity appreciation and realized gains. The Company focuses its investments in companies active in the technology industry sub-sectors.
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