Investcorp Credit Management BDC (NASDAQ:ICMB) & FS KKR Capital (NYSE:FSK) Head to Head Review

FS KKR Capital (NYSE:FSK) and Investcorp Credit Management BDC (NASDAQ:ICMB) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

Volatility & Risk

FS KKR Capital has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500. Comparatively, Investcorp Credit Management BDC has a beta of 0.42, suggesting that its stock price is 58% less volatile than the S&P 500.

Profitability

This table compares FS KKR Capital and Investcorp Credit Management BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS KKR Capital	17.24%	5.63%	2.49%
Investcorp Credit Management BDC	-0.30%	3.33%	1.19%

Dividends

FS KKR Capital pays an annual dividend of $2.56 per share and has a dividend yield of 17.3%. Investcorp Credit Management BDC pays an annual dividend of $0.48 per share and has a dividend yield of 17.4%. FS KKR Capital pays out 263.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Investcorp Credit Management BDC pays out -4,800.0% of its earnings in the form of a dividend. Investcorp Credit Management BDC has raised its dividend for 1 consecutive years. Investcorp Credit Management BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a breakdown of current ratings for FS KKR Capital and Investcorp Credit Management BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS KKR Capital	0	8	0	0	2.00
Investcorp Credit Management BDC	1	0	0	0	1.00

FS KKR Capital presently has a consensus target price of $17.50, indicating a potential upside of 18.28%. Given FS KKR Capital’s stronger consensus rating and higher possible upside, equities research analysts plainly believe FS KKR Capital is more favorable than Investcorp Credit Management BDC.

Earnings & Valuation

This table compares FS KKR Capital and Investcorp Credit Management BDC”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS KKR Capital	$373.00 million	11.11	$585.00 million	$0.97	15.25
Investcorp Credit Management BDC	$11.43 million	3.48	-$144,200.00	($0.01)	-276.00

FS KKR Capital has higher revenue and earnings than Investcorp Credit Management BDC. Investcorp Credit Management BDC is trading at a lower price-to-earnings ratio than FS KKR Capital, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

36.3% of FS KKR Capital shares are held by institutional investors. Comparatively, 7.8% of Investcorp Credit Management BDC shares are held by institutional investors. 0.2% of FS KKR Capital shares are held by company insiders. Comparatively, 1.3% of Investcorp Credit Management BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Summary

FS KKR Capital beats Investcorp Credit Management BDC on 12 of the 16 factors compared between the two stocks.

About FS KKR Capital

FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.

About Investcorp Credit Management BDC

Investcorp Credit Management BDC, Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, acquisitions, market/product expansion, organic growth, refinancings and recapitalization investments. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest between $5 million to $25 million in companies that have annual revenues of at least $50 million with EBITDA at least $15 million.