Financial Analysis: Medallion Financial (NASDAQ:MFIN) vs. Blackrock Tcp Capital (NASDAQ:TCPC)

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

Analyst Recommendations

This is a summary of current ratings and target prices for Blackrock Tcp Capital and Medallion Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackrock Tcp Capital	2	1	0	0	1.33
Medallion Financial	0	2	1	0	2.33

Blackrock Tcp Capital presently has a consensus target price of $6.50, suggesting a potential upside of 17.12%. Medallion Financial has a consensus target price of $12.00, suggesting a potential upside of 17.88%. Given Medallion Financial’s stronger consensus rating and higher probable upside, analysts clearly believe Medallion Financial is more favorable than Blackrock Tcp Capital.

Earnings and Valuation

This table compares Blackrock Tcp Capital and Medallion Financial”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackrock Tcp Capital	$259.44 million	1.81	-$63.14 million	($0.13)	-42.69
Medallion Financial	$302.03 million	0.78	$35.88 million	$1.71	5.95

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

Risk & Volatility

Blackrock Tcp Capital has a beta of 0.89, suggesting that its stock price is 11% less volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 0.69, suggesting that its stock price is 31% less volatile than the S&P 500.

Institutional & Insider Ownership

40.6% of Medallion Financial shares are held by institutional investors. 0.2% of Blackrock Tcp Capital shares are held by insiders. Comparatively, 24.6% of Medallion Financial shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Blackrock Tcp Capital and Medallion Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackrock Tcp Capital	-4.20%	15.27%	6.15%
Medallion Financial	12.12%	9.28%	1.55%

Dividends

Blackrock Tcp Capital pays an annual dividend of $1.00 per share and has a dividend yield of 18.0%. Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.7%. Blackrock Tcp Capital pays out -769.2% of its earnings in the form of a dividend. Medallion Financial pays out 28.1% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Blackrock Tcp Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

Medallion Financial beats Blackrock Tcp Capital on 10 of the 16 factors compared between the two stocks.

About Blackrock Tcp Capital

BlackRock TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, small businesses, debt securities, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It typically invests in communication services, public relations services, television, wireless telecommunication services, apparel, textile mills, restaurants, retailing, energy, oil and gas extraction, Patent owners and Lessors, Federal and Federally- Sponsored Credit agencies, insurance, hospital and healthcare centers, Biotechnology, engineering services, heavy electrical equipment, tax accounting, scientific and related consulting services, charter freight air transportation, Information technology consulting, application hosting services, software diagram and design, computer aided design, communication equipment, electronics manufacturing equipment, computer components, chemicals. It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million including complex situations. It prefers to make equity investments in companies for an ownership stake.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.