Investcorp Credit Management BDC (NASDAQ:ICMB) versus Fidus Investment (NASDAQ:FDUS) Critical Comparison

Investcorp Credit Management BDC (NASDAQ:ICMB) and Fidus Investment (NASDAQ:FDUS) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Volatility and Risk

Investcorp Credit Management BDC has a beta of 0.92, suggesting that its share price is 8% less volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500.

Profitability

This table compares Investcorp Credit Management BDC and Fidus Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Investcorp Credit Management BDC	38.05%	5.59%	2.07%
Fidus Investment	51.88%	11.52%	6.41%

Analyst Recommendations

This is a summary of current ratings and target prices for Investcorp Credit Management BDC and Fidus Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Investcorp Credit Management BDC	1	0	0	0	1.00
Fidus Investment	0	1	2	1	3.00

Fidus Investment has a consensus target price of $22.00, suggesting a potential upside of 4.41%. Given Fidus Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Fidus Investment is more favorable than Investcorp Credit Management BDC.

Dividends

Investcorp Credit Management BDC pays an annual dividend of $0.48 per share and has a dividend yield of 17.0%. Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 8.2%. Investcorp Credit Management BDC pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidus Investment pays out 74.5% of its earnings in the form of a dividend. Investcorp Credit Management BDC has raised its dividend for 1 consecutive years. Investcorp Credit Management BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Investcorp Credit Management BDC and Fidus Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Investcorp Credit Management BDC	$23.88 million	1.71	$7.79 million	$0.54	5.24
Fidus Investment	$146.15 million	5.10	$78.29 million	$2.31	9.12

Fidus Investment has higher revenue and earnings than Investcorp Credit Management BDC. Investcorp Credit Management BDC is trading at a lower price-to-earnings ratio than Fidus Investment, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

7.8% of Investcorp Credit Management BDC shares are owned by institutional investors. Comparatively, 28.1% of Fidus Investment shares are owned by institutional investors. 1.2% of Investcorp Credit Management BDC shares are owned by company insiders. Comparatively, 0.9% of Fidus Investment shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Summary

Fidus Investment beats Investcorp Credit Management BDC on 14 of the 18 factors compared between the two stocks.

About Investcorp Credit Management BDC

Investcorp Credit Management BDC, Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, acquisitions, market/product expansion, organic growth, refinancings and recapitalization investments. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest between $5 million to $25 million in companies that have annual revenues of at least $50 million with EBITDA at least $15 million.

About Fidus Investment

Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.