BlackRock TCP Capital (NASDAQ:TCPC) and Blue Capital Reinsurance (NYSE:BCRH) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, institutional ownership and earnings.

Profitability

This table compares BlackRock TCP Capital and Blue Capital Reinsurance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BlackRock TCP Capital 21.88% 11.27% 5.69%
Blue Capital Reinsurance -80.06% -25.86% -17.13%

Insider & Institutional Ownership

42.8% of BlackRock TCP Capital shares are owned by institutional investors. Comparatively, 39.9% of Blue Capital Reinsurance shares are owned by institutional investors. 0.6% of BlackRock TCP Capital shares are owned by insiders. Comparatively, 0.1% of Blue Capital Reinsurance 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.

Volatility and Risk

BlackRock TCP Capital has a beta of 0.71, suggesting that its share price is 29% less volatile than the S&P 500. Comparatively, Blue Capital Reinsurance has a beta of 0.7, suggesting that its share price is 30% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent recommendations for BlackRock TCP Capital and Blue Capital Reinsurance, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlackRock TCP Capital 0 0 4 0 3.00
Blue Capital Reinsurance 0 1 0 0 2.00

BlackRock TCP Capital currently has a consensus price target of $16.88, indicating a potential upside of 18.59%. Blue Capital Reinsurance has a consensus price target of $11.00, indicating a potential upside of 71.61%. Given Blue Capital Reinsurance’s higher probable upside, analysts plainly believe Blue Capital Reinsurance is more favorable than BlackRock TCP Capital.

Earnings and Valuation

This table compares BlackRock TCP Capital and Blue Capital Reinsurance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BlackRock TCP Capital $190.50 million 4.39 $45.48 million $1.59 8.95
Blue Capital Reinsurance $35.40 million 1.59 -$28.60 million ($3.27) -1.96

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

Dividends

BlackRock TCP Capital pays an annual dividend of $1.44 per share and has a dividend yield of 10.1%. Blue Capital Reinsurance pays an annual dividend of $0.60 per share and has a dividend yield of 9.4%. BlackRock TCP Capital pays out 90.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blue Capital Reinsurance pays out -18.3% of its earnings in the form of a dividend.

Summary

BlackRock TCP Capital beats Blue Capital Reinsurance on 13 of the 15 factors compared between the two stocks.

About BlackRock TCP Capital

BlackRock TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million. It prefers to make equity investments in companies for an ownership stake.

About Blue Capital Reinsurance

Blue Capital Reinsurance Holdings Ltd., through its subsidiaries, provides collateralized reinsurance in the property catastrophe market in the United States and internationally. It also invests in various insurance-linked securities. The company was founded in 2013 and is headquartered in Pembroke, Bermuda.

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