Analyzing Palmer Square Capital BDC (NYSE:PSBD) and Main Street Capital (NYSE:MAIN)

Palmer Square Capital BDC (NYSE:PSBD) and Main Street Capital (NYSE:MAIN) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, analyst recommendations, valuation, profitability, earnings and dividends.

Dividends

Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 10.4%. Main Street Capital pays an annual dividend of $3.06 per share and has a dividend yield of 4.8%. Palmer Square Capital BDC pays out 288.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Main Street Capital pays out 52.0% of its earnings in the form of a dividend. Main Street Capital has increased its dividend for 4 consecutive years.

Profitability

This table compares Palmer Square Capital BDC and Main Street Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Palmer Square Capital BDC	11.72%	11.04%	4.18%
Main Street Capital	94.61%	13.02%	6.95%

Institutional and Insider Ownership

6.5% of Palmer Square Capital BDC shares are owned by institutional investors. Comparatively, 20.3% of Main Street Capital shares are owned by institutional investors. 1.0% of Palmer Square Capital BDC shares are owned by insiders. Comparatively, 4.1% of Main Street Capital shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Valuation & Earnings

This table compares Palmer Square Capital BDC and Main Street Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Palmer Square Capital BDC	$143.51 million	3.12	$47.67 million	$0.50	27.64
Main Street Capital	$541.03 million	10.57	$508.08 million	$5.89	10.90

Main Street Capital has higher revenue and earnings than Palmer Square Capital BDC. Main Street Capital is trading at a lower price-to-earnings ratio than Palmer Square Capital BDC, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Palmer Square Capital BDC has a beta of 0.82, meaning that its stock price is 18% less volatile than the S&P 500. Comparatively, Main Street Capital has a beta of 0.85, meaning that its stock price is 15% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current ratings for Palmer Square Capital BDC and Main Street Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Palmer Square Capital BDC	0	2	2	0	2.50
Main Street Capital	0	4	1	0	2.20

Palmer Square Capital BDC currently has a consensus price target of $14.25, indicating a potential upside of 3.11%. Main Street Capital has a consensus price target of $53.60, indicating a potential downside of 16.53%. Given Palmer Square Capital BDC’s stronger consensus rating and higher probable upside, equities analysts clearly believe Palmer Square Capital BDC is more favorable than Main Street Capital.

Summary

Main Street Capital beats Palmer Square Capital BDC on 12 of the 17 factors compared between the two stocks.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.

About Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.