Critical Comparison: Medallion Financial (NASDAQ:MFIN) versus Carlyle Secured Lending (NASDAQ:CGBD)

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

Analyst Recommendations

This is a summary of recent ratings and target prices for Carlyle Secured Lending and Medallion Financial, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	0	5	3	0	2.38
Medallion Financial	1	1	1	0	2.00

Carlyle Secured Lending presently has a consensus price target of $13.20, indicating a potential upside of 20.77%. Medallion Financial has a consensus price target of $12.00, indicating a potential upside of 35.90%. Given Medallion Financial’s higher possible upside, analysts plainly believe Medallion Financial is more favorable than Carlyle Secured Lending.

Earnings & Valuation

This table compares Carlyle Secured Lending and Medallion Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carlyle Secured Lending	$255.57 million	3.02	$69.97 million	$1.02	10.72
Medallion Financial	$353.31 million	0.59	$43.04 million	$1.78	4.96

Carlyle Secured Lending has higher earnings, but lower revenue than Medallion Financial. Medallion Financial 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.

Insider & Institutional Ownership

24.5% of Carlyle Secured Lending shares are held by institutional investors. Comparatively, 40.6% of Medallion Financial shares are held by institutional investors. 0.6% of Carlyle Secured Lending shares are held by company insiders. Comparatively, 24.6% of Medallion Financial shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 14.6%. Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 5.4%. Carlyle Secured Lending pays out 156.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medallion Financial pays out 27.0% of its earnings in the form of a dividend.

Profitability

This table compares Carlyle Secured Lending and Medallion Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carlyle Secured Lending	27.38%	8.56%	3.90%
Medallion Financial	12.18%	9.38%	1.61%

Risk and Volatility

Carlyle Secured Lending has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Medallion Financial has a beta of 0.84, suggesting that its stock price is 16% less volatile than the S&P 500.

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.

About Medallion Financial

Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.