Critical Review: Carlyle Secured Lending (NASDAQ:CGBD) versus Crescent Capital BDC (NASDAQ:CCAP)

Carlyle Secured Lending (NASDAQ:CGBD) and Crescent Capital BDC (NASDAQ:CCAP) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, dividends, institutional ownership, earnings, valuation, risk and analyst recommendations.

Valuation and Earnings

This table compares Carlyle Secured Lending and Crescent Capital BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carlyle Secured Lending	$63.06 million	11.91	$69.97 million	$0.71	15.23
Crescent Capital BDC	$167.29 million	2.51	$34.51 million	$0.41	27.83

Carlyle Secured Lending has higher earnings, but lower revenue than Crescent Capital BDC. Carlyle Secured Lending is trading at a lower price-to-earnings ratio than Crescent Capital BDC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Carlyle Secured Lending and Crescent Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carlyle Secured Lending	19.52%	8.99%	4.01%
Crescent Capital BDC	9.26%	9.34%	4.04%

Analyst Recommendations

This is a breakdown of current ratings and target prices for Carlyle Secured Lending and Crescent Capital BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	0	4	3	0	2.43
Crescent Capital BDC	1	3	2	0	2.17

Carlyle Secured Lending currently has a consensus target price of $12.50, indicating a potential upside of 15.63%. Crescent Capital BDC has a consensus target price of $14.30, indicating a potential upside of 25.33%. Given Crescent Capital BDC’s higher possible upside, analysts plainly believe Crescent Capital BDC is more favorable than Carlyle Secured Lending.

Insider & Institutional Ownership

24.5% of Carlyle Secured Lending shares are owned by institutional investors. Comparatively, 49.5% of Crescent Capital BDC shares are owned by institutional investors. 0.6% of Carlyle Secured Lending shares are owned by insiders. Comparatively, 1.2% of Crescent Capital BDC shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Dividends

Carlyle Secured Lending pays an annual dividend of $1.40 per share and has a dividend yield of 13.0%. Crescent Capital BDC pays an annual dividend of $1.68 per share and has a dividend yield of 14.7%. Carlyle Secured Lending pays out 197.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Crescent Capital BDC pays out 409.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Crescent Capital BDC has increased its dividend for 1 consecutive years. Crescent Capital BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Risk and Volatility

Carlyle Secured Lending has a beta of 0.66, meaning that its stock price is 34% less volatile than the S&P 500. Comparatively, Crescent Capital BDC has a beta of 0.59, meaning that its stock price is 41% less volatile than the S&P 500.

Summary

Crescent Capital BDC beats Carlyle Secured Lending on 9 of the 17 factors compared between the two stocks.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.

About Crescent Capital BDC

Crescent Capital BDC, Inc. is as a business development company private equity / buyouts and loan fund. It specializes in directly investing. It specializes in middle market. The fund seeks to invest in United States.