Trinity Capital (NASDAQ:TRIN) and Chicago Atlantic BDC (NASDAQ:LIEN) Critical Survey

Trinity Capital (NASDAQ:TRIN) and Chicago Atlantic BDC (NASDAQ:LIEN) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, risk, earnings, institutional ownership, profitability, analyst recommendations and dividends.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Trinity Capital	46.18%	14.97%	6.68%
Chicago Atlantic BDC	33.72%	5.80%	5.46%

Valuation and Earnings

This table compares Trinity Capital and Chicago Atlantic BDC”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trinity Capital	$293.65 million	4.21	$135.60 million	$1.96	7.58
Chicago Atlantic BDC	$21.67 million	10.48	$9.62 million	$0.79	12.59

Trinity Capital has higher revenue and earnings than Chicago Atlantic BDC. Trinity 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.

Institutional and Insider Ownership

24.6% of Trinity Capital shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 6.4% of Trinity 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 large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of recent recommendations and price targets for Trinity Capital and Chicago Atlantic BDC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trinity Capital	1	1	5	1	2.75
Chicago Atlantic BDC	0	3	0	0	2.00

Trinity Capital presently has a consensus price target of $16.29, indicating a potential upside of 9.59%. Given Trinity Capital’s stronger consensus rating and higher possible upside, research analysts clearly believe Trinity Capital is more favorable than Chicago Atlantic BDC.

Dividends

Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 13.7%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 13.7%. Trinity Capital pays out 104.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chicago Atlantic BDC pays out 172.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Trinity Capital has increased its dividend for 1 consecutive years. Trinity Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Volatility & Risk

Trinity Capital has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.27, indicating that its share price is 73% less volatile than the S&P 500.

Summary

Trinity Capital beats Chicago Atlantic BDC on 15 of the 18 factors compared between the two stocks.

About Trinity Capital

Trinity Capital Inc. is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.

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.