Analyzing Eagle Point Credit (NYSE:ECC) & Great Elm Capital Group (NASDAQ:GECC)

Great Elm Capital Group (NASDAQ:GECC) and Eagle Point Credit (NYSE:ECC) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, analyst recommendations, profitability, risk and earnings.

Insider and Institutional Ownership

38.8% of Great Elm Capital Group shares are owned by institutional investors. Comparatively, 19.5% of Eagle Point Credit shares are owned by institutional investors. 8.7% of Great Elm Capital Group shares are owned by insiders. Comparatively, 0.2% of Eagle Point Credit shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Earnings and Valuation

This table compares Great Elm Capital Group and Eagle Point Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Great Elm Capital Group	$39.32 million	3.22	$3.55 million	$0.40	27.43
Eagle Point Credit	$179.77 million	2.96	$85.49 million	($0.40)	-17.31

Eagle Point Credit has higher revenue and earnings than Great Elm Capital Group. Eagle Point Credit is trading at a lower price-to-earnings ratio than Great Elm Capital Group, indicating that it is currently the more affordable of the two stocks.

Dividends

Great Elm Capital Group pays an annual dividend of $1.48 per share and has a dividend yield of 13.5%. Eagle Point Credit pays an annual dividend of $1.68 per share and has a dividend yield of 24.3%. Great Elm Capital Group pays out 370.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit pays out -420.0% of its earnings in the form of a dividend. Great Elm Capital Group has raised its dividend for 2 consecutive years. Eagle Point Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.

Risk & Volatility

Great Elm Capital Group has a beta of 1.08, indicating that its share price is 8% more volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and target prices for Great Elm Capital Group and Eagle Point Credit, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Great Elm Capital Group	0	0	0	0	0.00
Eagle Point Credit	0	1	1	0	2.50

Eagle Point Credit has a consensus target price of $8.67, suggesting a potential upside of 25.15%. Given Eagle Point Credit’s stronger consensus rating and higher possible upside, analysts clearly believe Eagle Point Credit is more favorable than Great Elm Capital Group.

Profitability

This table compares Great Elm Capital Group and Eagle Point Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Great Elm Capital Group	10.40%	10.64%	3.83%
Eagle Point Credit	-27.15%	12.90%	8.41%

Summary

Eagle Point Credit beats Great Elm Capital Group on 9 of the 17 factors compared between the two stocks.

About Great Elm Capital Group

Great Elm Capital Corp. is a business development company which specializes in loan and mezzanine, middle market investments. It invests in the debt instruments of middle market companies. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.