Reviewing MidCap Financial Investment (NASDAQ:MFIC) & Carlyle Secured Lending (NASDAQ:CGBD)

MidCap Financial Investment (NASDAQ:MFIC) and Carlyle Secured Lending (NASDAQ:CGBD) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their profitability, valuation, earnings, analyst recommendations, risk, institutional ownership and dividends.

Earnings & Valuation

This table compares MidCap Financial Investment and Carlyle Secured Lending”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$320.88 million	2.64	$63.17 million	($0.85)	-12.11
Carlyle Secured Lending	$255.57 million	3.03	$69.97 million	$0.53	21.51

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

Risk & Volatility

MidCap Financial Investment has a beta of 0.59, indicating that its share price is 41% less volatile than the S&P 500. Comparatively, Carlyle Secured Lending has a beta of 0.66, indicating that its share price is 34% less volatile than the S&P 500.

Dividends

MidCap Financial Investment pays an annual dividend of $1.24 per share and has a dividend yield of 12.1%. Carlyle Secured Lending pays an annual dividend of $1.40 per share and has a dividend yield of 12.3%. MidCap Financial Investment pays out -145.9% of its earnings in the form of a dividend. Carlyle Secured Lending pays out 264.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

This is a breakdown of recent recommendations and price targets for MidCap Financial Investment and Carlyle Secured Lending, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	1	7	0	0	1.88
Carlyle Secured Lending	0	5	2	0	2.29

MidCap Financial Investment currently has a consensus target price of $10.25, indicating a potential downside of 0.39%. Carlyle Secured Lending has a consensus target price of $11.50, indicating a potential upside of 0.88%. Given Carlyle Secured Lending’s stronger consensus rating and higher probable upside, analysts clearly believe Carlyle Secured Lending is more favorable than MidCap Financial Investment.

Institutional and Insider Ownership

28.4% of MidCap Financial Investment shares are owned by institutional investors. Comparatively, 24.5% of Carlyle Secured Lending shares are owned by institutional investors. 0.9% of MidCap Financial Investment shares are owned by company insiders. Comparatively, 0.3% of Carlyle Secured Lending shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares MidCap Financial Investment and Carlyle Secured Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	-26.23%	11.25%	4.39%
Carlyle Secured Lending	14.39%	8.82%	3.81%

Summary

Carlyle Secured Lending beats MidCap Financial Investment on 10 of the 16 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation is a business development company that provides financing to middle-market companies. Its investments are primarily in privately held businesses and may include senior secured loans, unitranche and other subordinated debt, and, to a lesser extent, equity securities. The company focuses mainly on lending to businesses in the United States across a range of industries. Its financing can support acquisitions, refinancings, growth initiatives, and other corporate needs.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is a business development company that provides financing to U.S. middle-market companies. Its investment portfolio focuses primarily on senior secured loans, including first-lien and second-lien debt, and may also include other debt and equity investments. The company is externally managed by Carlyle Global Credit Investment Management L.L.C., an affiliate of global investment firm Carlyle. Its strategy draws on Carlyle’s credit-investing platform to source and evaluate opportunities across a range of industries.