Head-To-Head Comparison: Main Street Capital (NYSE:MAIN) vs. FS KKR Capital (NYSE:FSK)

Main Street Capital (NYSE:MAIN) and FS KKR Capital (NYSE:FSK) are both finance companies, but which is the superior stock? We will compare the two companies based on the strength of their profitability, valuation, risk, analyst recommendations, earnings, dividends and institutional ownership.

Analyst Recommendations

This is a summary of current recommendations for Main Street Capital and FS KKR Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Main Street Capital	0	5	4	0	2.44
FS KKR Capital	0	8	0	0	2.00

Main Street Capital currently has a consensus price target of $62.43, suggesting a potential upside of 0.28%. FS KKR Capital has a consensus price target of $17.50, suggesting a potential upside of 19.58%. Given FS KKR Capital’s higher probable upside, analysts clearly believe FS KKR Capital is more favorable than Main Street Capital.

Valuation & Earnings

This table compares Main Street Capital and FS KKR Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Main Street Capital	$541.03 million	10.31	$508.08 million	$6.03	10.32
FS KKR Capital	$1.72 billion	N/A	$585.00 million	$0.97	15.09

FS KKR Capital has higher revenue and earnings than Main Street Capital. Main Street Capital 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.

Dividends

Main Street Capital pays an annual dividend of $3.06 per share and has a dividend yield of 4.9%. FS KKR Capital pays an annual dividend of $2.56 per share and has a dividend yield of 17.5%. Main Street Capital pays out 50.7% of its earnings in the form of a dividend. 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. Main Street Capital has increased its dividend for 4 consecutive years.

Profitability

This table compares Main Street Capital and FS KKR Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Main Street Capital	95.59%	12.39%	6.77%
FS KKR Capital	17.24%	5.63%	2.49%

Volatility and Risk

Main Street Capital has a beta of 0.8, suggesting that its share price is 20% less volatile than the S&P 500. Comparatively, FS KKR Capital has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.

Insider & Institutional Ownership

20.3% of Main Street Capital shares are owned by institutional investors. Comparatively, 36.3% of FS KKR Capital shares are owned by institutional investors. 4.0% of Main Street Capital shares are owned by company insiders. Comparatively, 0.2% of FS KKR Capital shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

Main Street Capital beats FS KKR Capital on 9 of the 16 factors compared between the two stocks.

About Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.

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.