Monroe Capital (NASDAQ:MRCC) & Eagle Point Credit (NYSE:ECC) Head to Head Comparison

Monroe Capital (NASDAQ:MRCC) and Eagle Point Credit (NYSE:ECC) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, dividends, analyst recommendations, valuation and earnings.

Dividends

Monroe Capital pays an annual dividend of $1.00 per share and has a dividend yield of 14.6%. Eagle Point Credit pays an annual dividend of $1.68 per share and has a dividend yield of 28.6%. Monroe Capital pays out 1,111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit pays out 1,527.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Monroe Capital and Eagle Point Credit’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Monroe Capital	3.74%	10.70%	4.38%
Eagle Point Credit	6.73%	13.49%	8.59%

Earnings and Valuation

This table compares Monroe Capital and Eagle Point Credit”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Monroe Capital	$60.53 million	2.45	$9.70 million	$0.09	76.11
Eagle Point Credit	$179.77 million	2.51	$85.49 million	$0.11	53.41

Eagle Point Credit has higher revenue and earnings than Monroe Capital. Eagle Point Credit is trading at a lower price-to-earnings ratio than Monroe Capital, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Monroe Capital has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.39, suggesting that its share price is 61% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Monroe Capital and Eagle Point Credit, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Monroe Capital	1	2	0	0	1.67
Eagle Point Credit	0	2	3	1	2.83

Monroe Capital currently has a consensus target price of $7.63, indicating a potential upside of 11.31%. Eagle Point Credit has a consensus target price of $8.21, indicating a potential upside of 39.72%. Given Eagle Point Credit’s stronger consensus rating and higher probable upside, analysts plainly believe Eagle Point Credit is more favorable than Monroe Capital.

Insider and Institutional Ownership

19.5% of Eagle Point Credit shares are held by institutional investors. 3.8% of Monroe Capital shares are held by insiders. Comparatively, 0.2% of Eagle Point Credit shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Summary

Eagle Point Credit beats Monroe Capital on 13 of the 17 factors compared between the two stocks.

About Monroe Capital

Monroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.