Contrasting StoneCastle Financial (BANX) and TCP Capital (TCPC)
StoneCastle Financial (NASDAQ: BANX) and TCP Capital (NASDAQ:TCPC) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, analyst recommendations, risk and dividends.
StoneCastle Financial pays an annual dividend of $1.52 per share and has a dividend yield of 7.1%. TCP Capital pays an annual dividend of $1.44 per share and has a dividend yield of 9.3%. StoneCastle Financial pays out 86.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TCP Capital pays out 102.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a summary of current recommendations and price targets for StoneCastle Financial and TCP Capital, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
StoneCastle Financial currently has a consensus price target of $22.75, indicating a potential upside of 6.01%. TCP Capital has a consensus price target of $18.00, indicating a potential upside of 16.58%. Given TCP Capital’s higher probable upside, analysts clearly believe TCP Capital is more favorable than StoneCastle Financial.
Valuation & Earnings
This table compares StoneCastle Financial and TCP Capital’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|StoneCastle Financial||$17.03 million||8.24||$7.01 million||$1.76||12.19|
|TCP Capital||$148.18 million||6.13||$95.36 million||$1.41||10.95|
TCP Capital has higher revenue and earnings than StoneCastle Financial. TCP Capital is trading at a lower price-to-earnings ratio than StoneCastle Financial, indicating that it is currently the more affordable of the two stocks.
This table compares StoneCastle Financial and TCP Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Risk and Volatility
StoneCastle Financial has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500. Comparatively, TCP Capital has a beta of 0.71, indicating that its share price is 29% less volatile than the S&P 500.
Insider and Institutional Ownership
32.4% of StoneCastle Financial shares are held by institutional investors. Comparatively, 49.6% of TCP Capital shares are held by institutional investors. 8.0% of StoneCastle Financial shares are held by company insiders. Comparatively, 0.6% of TCP Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
TCP Capital beats StoneCastle Financial on 9 of the 15 factors compared between the two stocks.
StoneCastle Financial Company Profile
StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.
TCP Capital Company Profile
TCP Capital Corp. is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to achieve high total returns through current income and capital appreciation, with an emphasis on principal protection. It invests in the debt of middle-market companies, as well as small businesses, including senior secured loans, junior loans, mezzanine debt and bonds. Its investments may include an equity component and may make equity investments directly. It intends to focus on privately negotiated investments in debt of middle-market companies. It may make investments of all kinds and at all levels of the capital structure, including in equity interests, such as preferred or common stock and warrants or options received in connection with its debt investments. As of December 31, 2016, its investment portfolio consisted of 90 portfolio companies. Tennenbaum Capital Partners, LLC is the investment manager and advisor of the Company.
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