Reviewing Bain Capital Specialty Finance (NYSE:BCSF) & Carlyle Secured Lending (NASDAQ:CGBD)

Bain Capital Specialty Finance (NYSE:BCSF) and Carlyle Secured Lending (NASDAQ:CGBD) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, dividends, earnings, profitability, risk and institutional ownership.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Bain Capital Specialty Finance and Carlyle Secured Lending, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bain Capital Specialty Finance	0	2	1	0	2.33
Carlyle Secured Lending	1	6	2	0	2.11

Bain Capital Specialty Finance currently has a consensus target price of $15.00, indicating a potential upside of 7.45%. Carlyle Secured Lending has a consensus target price of $14.33, indicating a potential upside of 13.22%. Given Carlyle Secured Lending’s higher probable upside, analysts plainly believe Carlyle Secured Lending is more favorable than Bain Capital Specialty Finance.

Profitability

This table compares Bain Capital Specialty Finance and Carlyle Secured Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bain Capital Specialty Finance	33.45%	11.03%	4.66%
Carlyle Secured Lending	30.18%	9.24%	4.29%

Valuation & Earnings

This table compares Bain Capital Specialty Finance and Carlyle Secured Lending”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bain Capital Specialty Finance	$110.18 million	8.22	$119.42 million	$1.44	9.69
Carlyle Secured Lending	$84.16 million	7.67	$88.98 million	$1.18	10.73

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

Volatility & Risk

Bain Capital Specialty Finance has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Carlyle Secured Lending has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500.

Dividends

Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 12.0%. Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 12.6%. 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. Carlyle Secured Lending pays out 135.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance has raised its dividend for 4 consecutive years.

Insider and Institutional Ownership

24.5% of Carlyle Secured Lending shares are held by institutional investors. 0.6% of Bain Capital Specialty Finance shares are held by insiders. Comparatively, 0.6% of Carlyle Secured Lending shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Bain Capital Specialty Finance beats Carlyle Secured Lending on 11 of the 17 factors compared between the two stocks.

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.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.