Contrasting Chicago Atlantic BDC (NASDAQ:LIEN) & Main Street Capital (NYSE:MAIN)

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

Institutional & Insider Ownership

20.3% of Main Street Capital shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 4.0% of Main Street Capital shares are held by company insiders. Comparatively, 16.9% of Chicago Atlantic BDC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Main Street Capital	96.16%	12.70%	6.85%
Chicago Atlantic BDC	21.50%	3.25%	3.07%

Dividends

Main Street Capital pays an annual dividend of $3.06 per share and has a dividend yield of 4.9%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 12.3%. Main Street Capital pays out 50.4% of its earnings in the form of a dividend. Chicago Atlantic BDC pays out 367.6% 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 has raised its dividend for 4 consecutive years.

Volatility & Risk

Main Street Capital has a beta of 0.88, meaning that its share price is 12% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.28, meaning that its share price is 72% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Main Street Capital and Chicago Atlantic BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Main Street Capital	0	4	1	1	2.50
Chicago Atlantic BDC	0	3	0	0	2.00

Main Street Capital presently has a consensus target price of $61.20, suggesting a potential downside of 2.70%. Given Main Street Capital’s stronger consensus rating and higher possible upside, research analysts clearly believe Main Street Capital is more favorable than Chicago Atlantic BDC.

Valuation and Earnings

This table compares Main Street Capital and Chicago Atlantic BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Main Street Capital	$541.03 million	10.40	$508.08 million	$6.07	10.36
Chicago Atlantic BDC	$21.67 million	11.68	$9.62 million	$0.37	29.97

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

Summary

Main Street Capital beats Chicago Atlantic BDC on 14 of the 18 factors compared between the two stocks.

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.

About Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.