Analyzing TriplePoint Venture Growth BDC (TPVG) & Capitala Finance (CPTA)

Capitala Finance (NASDAQ: CPTA) and TriplePoint Venture Growth BDC (NYSE:TPVG) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, risk, institutional ownership, profitability and dividends.

Analyst Ratings

This is a summary of current ratings and recommmendations for Capitala Finance and TriplePoint Venture Growth BDC, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Capitala Finance 0 4 1 0 2.20
TriplePoint Venture Growth BDC 0 1 1 0 2.50

Capitala Finance presently has a consensus target price of $13.50, suggesting a potential upside of 75.10%. TriplePoint Venture Growth BDC has a consensus target price of $14.00, suggesting a potential upside of 7.53%. Given Capitala Finance’s higher possible upside, equities research analysts clearly believe Capitala Finance is more favorable than TriplePoint Venture Growth BDC.

Earnings and Valuation

This table compares Capitala Finance and TriplePoint Venture Growth BDC’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Capitala Finance $68.31 million 1.80 $9.15 million $0.11 70.10
TriplePoint Venture Growth BDC $43.63 million 5.28 $11.12 million N/A N/A

TriplePoint Venture Growth BDC has lower revenue, but higher earnings than Capitala Finance.

Dividends

Capitala Finance pays an annual dividend of $1.00 per share and has a dividend yield of 13.0%. TriplePoint Venture Growth BDC pays an annual dividend of $1.44 per share and has a dividend yield of 11.1%. Capitala Finance pays out 909.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Capitala Finance has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500. Comparatively, TriplePoint Venture Growth BDC has a beta of 1.36, indicating that its stock price is 36% more volatile than the S&P 500.

Profitability

This table compares Capitala Finance and TriplePoint Venture Growth BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Capitala Finance 3.04% 7.49% 3.19%
TriplePoint Venture Growth BDC 43.72% 12.05% 5.99%

Insider & Institutional Ownership

18.3% of Capitala Finance shares are owned by institutional investors. Comparatively, 33.8% of TriplePoint Venture Growth BDC shares are owned by institutional investors. 8.4% of Capitala Finance shares are owned by company insiders. Comparatively, 1.3% of TriplePoint Venture Growth BDC shares are owned 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.

Summary

TriplePoint Venture Growth BDC beats Capitala Finance on 10 of the 14 factors compared between the two stocks.

About Capitala Finance

Capitala Finance Corp. 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 debt and equity investments. Both directly and through its subsidiaries that are licensed by the United States Small Business Administration (SBA), the Company offers financing to business owners, management teams and financial sponsors for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives. The Company provides capital to lower and traditional middle-market companies in the United States, with a non-exclusive emphasis on the Southeast, Southwest and Mid-Atlantic regions. The Company invests in first lien, second lien and subordinated loans. The Company’s investment advisor is Capitala Investment Advisors, LLC.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its total return to stockholders primarily in the form of current income and, to a lesser extent, capital appreciation by primarily lending with warrants to venture growth stage companies focused in technology, life sciences and other high growth industries, which are backed by TriplePoint Capital LLC’s (TPC) select group of venture capital investors. The Company targets investment opportunities in venture growth stage companies backed by venture capital investors. The Company originates and invests primarily in loans that have a secured collateral position and are used by venture growth stage companies to finance their continued expansion and growth, equipment financings and, on a select basis, revolving loans. The Company is managed by TPVG Advisers LLC.

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