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

Insider & Institutional Ownership

39.4% of BlackRock TCP Capital shares are owned by institutional investors. Comparatively, 18.8% of Watford shares are owned by institutional investors. 0.6% of BlackRock TCP Capital shares are owned by insiders. Comparatively, 16.6% of Watford shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a summary of current ratings and price targets for BlackRock TCP Capital and Watford, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlackRock TCP Capital 0 1 2 0 2.67
Watford 0 4 1 0 2.20

BlackRock TCP Capital currently has a consensus price target of $16.17, indicating a potential upside of 14.33%. Watford has a consensus price target of $29.00, indicating a potential upside of 21.80%. Given Watford’s higher probable upside, analysts clearly believe Watford is more favorable than BlackRock TCP Capital.

Profitability

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

Net Margins Return on Equity Return on Assets
BlackRock TCP Capital 15.69% 11.72% 5.57%
Watford -2.81% -1.82% -0.49%

Earnings and Valuation

This table compares BlackRock TCP Capital and Watford’s top-line 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 4.36 $45.48 million $1.59 8.89
Watford $575.23 million 0.89 -$34.88 million N/A N/A

BlackRock TCP Capital has higher earnings, but lower revenue than Watford.

Summary

BlackRock TCP Capital beats Watford on 8 of the 11 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 Watford

Watford Holdings Ltd., together with its subsidiaries, operates as a property, casualty, and mortgage insurance and reinsurance company worldwide. The company was founded in 2013 and is headquartered in Pembroke, Bermuda.

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