Oxford Square Capital (NASDAQ:OXSQ) and Bain Capital Specialty Finance (NYSE:BCSF) Head to Head Analysis

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

Volatility and Risk

Bain Capital Specialty Finance has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, Oxford Square Capital has a beta of 0.38, suggesting that its share price is 62% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Bain Capital Specialty Finance and Oxford Square Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bain Capital Specialty Finance	0	2	1	0	2.33
Oxford Square Capital	1	0	0	0	1.00

Bain Capital Specialty Finance currently has a consensus price target of $14.00, indicating a potential upside of 9.38%. Given Bain Capital Specialty Finance’s stronger consensus rating and higher possible upside, equities analysts clearly believe Bain Capital Specialty Finance is more favorable than Oxford Square Capital.

Earnings and Valuation

This table compares Bain Capital Specialty Finance and Oxford Square Capital”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	$273.24 million	3.04	$98.76 million	$1.14	11.23
Oxford Square Capital	$40.34 million	3.41	-$18.73 million	($0.43)	-3.42

Bain Capital Specialty Finance has higher revenue and earnings than Oxford Square Capital. Oxford Square Capital 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.

Dividends

Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 13.1%. Oxford Square Capital pays an annual dividend of $0.42 per share and has a dividend yield of 28.6%. Bain Capital Specialty Finance pays out 147.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Oxford Square Capital pays out -97.7% of its earnings in the form of a dividend. Bain Capital Specialty Finance has raised its dividend for 4 consecutive years. Oxford Square Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Bain Capital Specialty Finance and Oxford Square Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bain Capital Specialty Finance	27.00%	10.44%	4.35%
Oxford Square Capital	-92.37%	14.11%	7.02%

Insider and Institutional Ownership

6.4% of Oxford Square Capital shares are held by institutional investors. 0.6% of Bain Capital Specialty Finance shares are held by company insiders. Comparatively, 6.5% of Oxford Square Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Bain Capital Specialty Finance beats Oxford Square Capital on 10 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 Oxford Square Capital

Oxford Square Capital Corp. is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.