TPG Specialty Lending (NYSE: TSLX) and Medley Capital Corporation (NYSE:MCC) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their profitabiliy, institutional ownership, valuation, dividends, risk, analyst recommendations and earnings.
Valuation and Earnings
This table compares TPG Specialty Lending and Medley Capital Corporation’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|TPG Specialty Lending||N/A||N/A||N/A||$2.48||8.27|
|Medley Capital Corporation||N/A||N/A||N/A||$0.10||63.91|
TPG Specialty Lending is trading at a lower price-to-earnings ratio than Medley Capital Corporation, indicating that it is currently the more affordable of the two stocks.
This table compares TPG Specialty Lending and Medley Capital Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|TPG Specialty Lending||73.53%||11.94%||6.85%|
|Medley Capital Corporation||4.60%||8.10%||4.00%|
TPG Specialty Lending pays an annual dividend of $1.56 per share and has a dividend yield of 7.6%. Medley Capital Corporation pays an annual dividend of $0.64 per share and has a dividend yield of 10.0%. TPG Specialty Lending pays out 62.9% of its earnings in the form of a dividend. Medley Capital Corporation pays out 640.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Institutional & Insider Ownership
64.4% of TPG Specialty Lending shares are held by institutional investors. Comparatively, 36.2% of Medley Capital Corporation shares are held by institutional investors. 4.9% of TPG Specialty Lending shares are held by insiders. Comparatively, 8.7% of Medley Capital Corporation shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.
This is a summary of current ratings and recommmendations for TPG Specialty Lending and Medley Capital Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|TPG Specialty Lending||0||4||1||0||2.20|
|Medley Capital Corporation||0||5||0||0||2.00|
TPG Specialty Lending presently has a consensus target price of $18.00, suggesting a potential downside of 12.20%. Medley Capital Corporation has a consensus target price of $7.38, suggesting a potential upside of 15.41%. Given Medley Capital Corporation’s higher possible upside, analysts clearly believe Medley Capital Corporation is more favorable than TPG Specialty Lending.
Volatility & Risk
TPG Specialty Lending has a beta of 0.71, indicating that its stock price is 29% less volatile than the S&P 500. Comparatively, Medley Capital Corporation has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.
TPG Specialty Lending beats Medley Capital Corporation on 8 of the 12 factors compared between the two stocks.
TPG Specialty Lending Company Profile
TPG Specialty Lending, Inc. is an externally managed, closed-end, non-diversified management investment company. The Company is a specialty finance company focused on lending to middle-market companies. It seeks to generate current income primarily in the United States-domiciled middle-market companies through direct originations of senior secured loans and originations of mezzanine and unsecured loans and investments in corporate bonds and equity securities. The Company invests in first-lien debt, second-lien debt, mezzanine and unsecured debt and equity and other investments. Its first-lien debt may include standalone first-lien loans; last out first-lien loans; unitranche loans and secured corporate bonds. Its second-lien debt may include secured loans and secured corporate bonds, with a secondary priority behind first-lien debt. As of December 31, 2016, the Company’s portfolio was invested across 19 different industries. The Company’s investment advisor is TSL Advisers, LLC.
Medley Capital Corporation Company Profile
Medley Capital Corporation is a non-diversified closed-end management investment company. The Company’s investment objective is to generate current income and capital appreciation by lending directly to privately-held middle market companies, primarily through directly originated transactions to help these companies expand their business, refinance and make acquisitions. Its investment portfolio includes senior secured first lien term loans, senior secured second lien term loans, unitranche, senior secured first lien notes, subordinated notes and warrants and minority equity securities. It may invest up to 100% of its assets in securities acquired directly from issuers in privately negotiated transactions. Its portfolio of investments includes industries, including banking, finance, insurance and real estate; construction and building; healthcare and pharmaceuticals; beverage and food, and telecommunications. MCC Advisors LLC is the Company’s investment advisor.
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