Invesco Trust for Investment Grade Municipals (NYSE:VGM) versus MidCap Financial Investment (NASDAQ:MFIC) Critical Review

MidCap Financial Investment (NASDAQ:MFICGet Free Report) and Invesco Trust for Investment Grade Municipals (NYSE:VGMGet Free Report) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, profitability, risk, valuation, earnings, institutional ownership and dividends.

Volatility & Risk

MidCap Financial Investment has a beta of 1.47, suggesting that its stock price is 47% more volatile than the S&P 500. Comparatively, Invesco Trust for Investment Grade Municipals has a beta of 0.51, suggesting that its stock price is 49% less volatile than the S&P 500.

Profitability

This table compares MidCap Financial Investment and Invesco Trust for Investment Grade Municipals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MidCap Financial Investment 32.40% 11.51% 4.58%
Invesco Trust for Investment Grade Municipals N/A N/A N/A

Dividends

MidCap Financial Investment pays an annual dividend of $1.52 per share and has a dividend yield of 10.9%. Invesco Trust for Investment Grade Municipals pays an annual dividend of $0.43 per share and has a dividend yield of 4.3%. MidCap Financial Investment pays out 114.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MidCap Financial Investment has increased its dividend for 2 consecutive years. MidCap Financial Investment is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Recommendations

This is a summary of current ratings and recommmendations for MidCap Financial Investment and Invesco Trust for Investment Grade Municipals, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MidCap Financial Investment 0 1 2 0 2.67
Invesco Trust for Investment Grade Municipals 0 0 0 0 N/A

MidCap Financial Investment presently has a consensus price target of $14.42, suggesting a potential upside of 3.57%. Given MidCap Financial Investment’s higher possible upside, equities research analysts clearly believe MidCap Financial Investment is more favorable than Invesco Trust for Investment Grade Municipals.

Valuation & Earnings

This table compares MidCap Financial Investment and Invesco Trust for Investment Grade Municipals’ gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MidCap Financial Investment $230.35 million 3.94 $1.29 million $1.33 10.47
Invesco Trust for Investment Grade Municipals N/A N/A N/A N/A N/A

MidCap Financial Investment has higher revenue and earnings than Invesco Trust for Investment Grade Municipals.

Institutional and Insider Ownership

28.0% of MidCap Financial Investment shares are owned by institutional investors. Comparatively, 30.7% of Invesco Trust for Investment Grade Municipals shares are owned by institutional investors. 1.2% of MidCap Financial Investment shares are owned by insiders. Comparatively, 1.0% of Invesco Trust for Investment Grade Municipals shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

MidCap Financial Investment beats Invesco Trust for Investment Grade Municipals on 10 of the 12 factors compared between the two stocks.

About MidCap Financial Investment

(Get Free Report)

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 Invesco Trust for Investment Grade Municipals

(Get Free Report)

Invesco Trust for Investment Grade Municipals is a closed-ended fixed income mutual fund launched by Invesco Ltd. The fund is co-managed by Invesco Advisers, Inc., INVESCO Asset Management (Japan) Limited, INVESCO Asset Management Deutschland GmbH, INVESCO Asset Management Limited, Invesco Canada Ltd., Invesco Hong Kong Limited, and INVESCO Senior Secured Management, Inc. It invests in the fixed income markets of the United States. The fund primarily invests in investment grade municipal securities which include municipal bonds, municipal notes, municipal commercial paper, and lease obligations. It employs fundamental analysis with bottom-up security selection approach to create its portfolio. The fund was formerly known as Invesco Van Kampen Trust for Investment Grade Municipals. Invesco Trust for Investment Grade Municipals was formed on January 24, 1992 and is domiciled in the United States.

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