Contrasting StoneCastle Financial (BANX) and TCP Capital (TCPC)

StoneCastle Financial (NASDAQ: BANX) and TCP Capital (NASDAQ:TCPC) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, valuation, earnings, risk and dividends.

Insider & Institutional Ownership

32.4% of StoneCastle Financial shares are owned by institutional investors. Comparatively, 49.5% of TCP Capital shares are owned by institutional investors. 8.0% of StoneCastle Financial shares are owned by insiders. Comparatively, 0.6% of TCP Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

StoneCastle Financial pays an annual dividend of $1.52 per share and has a dividend yield of 6.9%. TCP Capital pays an annual dividend of $1.44 per share and has a dividend yield of 9.4%. StoneCastle Financial pays out 86.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TCP Capital pays out 105.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility & Risk

StoneCastle Financial has a beta of 0.2, indicating that its stock price is 80% less volatile than the S&P 500. Comparatively, TCP Capital has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500.

Profitability

This table compares StoneCastle Financial and TCP Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
StoneCastle Financial 66.86% N/A N/A
TCP Capital 49.53% 12.17% 6.82%

Analyst Ratings

This is a summary of current ratings and recommmendations for StoneCastle Financial and TCP Capital, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
StoneCastle Financial 0 0 4 0 3.00
TCP Capital 0 0 5 0 3.00

StoneCastle Financial currently has a consensus price target of $22.75, indicating a potential upside of 3.88%. TCP Capital has a consensus price target of $18.00, indicating a potential upside of 17.65%. Given TCP Capital’s higher probable upside, analysts clearly believe TCP Capital is more favorable than StoneCastle Financial.

Earnings & Valuation

This table compares StoneCastle Financial and TCP Capital’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
StoneCastle Financial $17.03 million 8.41 $7.01 million $1.76 12.44
TCP Capital $148.18 million 6.07 $95.36 million $1.37 11.17

TCP Capital has higher revenue and earnings than StoneCastle Financial. TCP Capital is trading at a lower price-to-earnings ratio than StoneCastle Financial, indicating that it is currently the more affordable of the two stocks.

Summary

TCP Capital beats StoneCastle Financial on 9 of the 15 factors compared between the two stocks.

About StoneCastle Financial

StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.

About TCP Capital

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.

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