Comparing Barings Bdc (NYSE:BBDC) & Rand Capital (NASDAQ:RAND)

Rand Capital (NASDAQ:RAND) and Barings Bdc (NYSE:BBDC) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Institutional & Insider Ownership

44.1% of Barings Bdc shares are owned by institutional investors. 68.2% of Rand Capital shares are owned by insiders. Comparatively, 0.5% of Barings Bdc shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings and Valuation

This table compares Rand Capital and Barings Bdc”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rand Capital	$8.56 million	3.83	$8.83 million	($4.20)	-2.63
Barings Bdc	$286.17 million	3.36	$110.29 million	$0.97	9.43

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

Dividends

Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 10.5%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 11.4%. Rand Capital pays out -27.6% of its earnings in the form of a dividend. Barings Bdc pays out 107.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has raised its dividend for 3 consecutive years. Barings Bdc is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Rand Capital has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500. Comparatively, Barings Bdc has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Rand Capital and Barings Bdc, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rand Capital	1	0	0	0	1.00
Barings Bdc	0	1	3	0	2.75

Barings Bdc has a consensus price target of $9.67, suggesting a potential upside of 5.64%. Given Barings Bdc’s stronger consensus rating and higher possible upside, analysts plainly believe Barings Bdc is more favorable than Rand Capital.

Profitability

This table compares Rand Capital and Barings Bdc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rand Capital	-164.74%	7.12%	6.80%
Barings Bdc	36.50%	10.01%	4.21%

Summary

Barings Bdc beats Rand Capital on 13 of the 17 factors compared between the two stocks.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.

About Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.