Contrasting TriplePoint Venture Growth BDC (NYSE:TPVG) and Bain Capital Specialty Finance (NYSE:BCSF)

TriplePoint Venture Growth BDC (NYSE:TPVG) and Bain Capital Specialty Finance (NYSE:BCSF) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, risk, institutional ownership, earnings, analyst recommendations, profitability and valuation.

Volatility & Risk

TriplePoint Venture Growth BDC has a beta of 1.35, suggesting that its stock price is 35% more volatile than the S&P 500. Comparatively, Bain Capital Specialty Finance has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Institutional and Insider Ownership

12.8% of TriplePoint Venture Growth BDC shares are held by institutional investors. 1.5% of TriplePoint Venture Growth BDC shares are held by company insiders. Comparatively, 0.6% of Bain Capital Specialty Finance shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for TriplePoint Venture Growth BDC and Bain Capital Specialty Finance, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TriplePoint Venture Growth BDC	3	4	0	0	1.57
Bain Capital Specialty Finance	0	2	1	0	2.33

TriplePoint Venture Growth BDC presently has a consensus price target of $6.25, indicating a potential downside of 0.95%. Bain Capital Specialty Finance has a consensus price target of $15.50, indicating a potential upside of 9.08%. Given Bain Capital Specialty Finance’s stronger consensus rating and higher possible upside, analysts clearly believe Bain Capital Specialty Finance is more favorable than TriplePoint Venture Growth BDC.

Dividends

TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 14.6%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 11.8%. TriplePoint Venture Growth BDC pays out 108.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance pays out 116.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance has raised its dividend for 4 consecutive years. TriplePoint Venture Growth BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares TriplePoint Venture Growth BDC and Bain Capital Specialty Finance”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TriplePoint Venture Growth BDC	$108.65 million	2.35	$32.05 million	$0.85	7.42
Bain Capital Specialty Finance	$292.65 million	3.15	$119.42 million	$1.44	9.87

Bain Capital Specialty Finance has higher revenue and earnings than TriplePoint Venture Growth BDC. TriplePoint Venture Growth BDC is trading at a lower price-to-earnings ratio than Bain Capital Specialty Finance, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares TriplePoint Venture Growth BDC and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TriplePoint Venture Growth BDC	36.02%	12.88%	5.76%
Bain Capital Specialty Finance	33.45%	11.03%	4.66%

Summary

Bain Capital Specialty Finance beats TriplePoint Venture Growth BDC on 9 of the 17 factors compared between the two stocks.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.