Comparing MidCap Financial Investment (NASDAQ:MFIC) and Atlanticus (NASDAQ:ATLC)

MidCap Financial Investment (NASDAQ:MFIC) and Atlanticus (NASDAQ:ATLC) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, analyst recommendations, earnings, valuation and profitability.

Insider and Institutional Ownership

28.5% of MidCap Financial Investment shares are owned by institutional investors. Comparatively, 14.2% of Atlanticus shares are owned by institutional investors. 0.8% of MidCap Financial Investment shares are owned by insiders. Comparatively, 50.4% of Atlanticus shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation & Earnings

This table compares MidCap Financial Investment and Atlanticus”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$301.78 million	3.77	$98.82 million	$1.08	11.30
Atlanticus	$1.31 billion	0.71	$111.30 million	$5.69	10.76

Atlanticus has higher revenue and earnings than MidCap Financial Investment. Atlanticus is trading at a lower price-to-earnings ratio than MidCap Financial Investment, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

MidCap Financial Investment has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500. Comparatively, Atlanticus has a beta of 2.15, meaning that its stock price is 115% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for MidCap Financial Investment and Atlanticus, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	0	4	3	0	2.43
Atlanticus	0	2	5	0	2.71

MidCap Financial Investment currently has a consensus price target of $13.42, suggesting a potential upside of 9.97%. Atlanticus has a consensus price target of $76.60, suggesting a potential upside of 25.08%. Given Atlanticus’ stronger consensus rating and higher possible upside, analysts plainly believe Atlanticus is more favorable than MidCap Financial Investment.

Profitability

This table compares MidCap Financial Investment and Atlanticus’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	30.60%	10.44%	4.41%
Atlanticus	8.51%	24.20%	3.72%

Summary

Atlanticus beats MidCap Financial Investment on 9 of the 14 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.

About Atlanticus

Atlanticus Holdings Corporation, a financial technology company, provides credit and related financial services and products to customers the United States. It operates in two segments, Credit as a Service, and Auto Finance. The Credit as a Service segment originates a range of consumer loan products, such as private label and general purpose credit cards originated by lenders through various channels, including retail and healthcare, direct mail solicitation, digital marketing, and partnerships with third parties; and offers credit to their customers for the purchase of various goods and services, including consumer electronics, furniture, elective medical procedures, healthcare, and home-improvements by partnering with retailers, healthcare providers, and other service providers. This segment also offers loan servicing, such as risk management and customer service outsourcing for third parties; and engages in testing and investment activities in consumer finance technology platforms. The Auto Finance segment purchases and/or services loans secured by automobiles from or for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, and used car business. This segment also provides floor plan financing and installment lending products. It also invests in and services portfolios of credit card receivables. The company was founded in 1996 and is headquartered in Atlanta, Georgia.