Head to Head Survey: Rand Capital (NASDAQ:RAND) versus Carlyle Secured Lending (NASDAQ:CGBD)

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

Institutional and Insider Ownership

24.5% of Carlyle Secured Lending shares are owned by institutional investors. 0.6% of Carlyle Secured Lending shares are owned by company insiders. Comparatively, 68.2% of Rand Capital shares are owned 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 breakdown of current ratings and price targets for Carlyle Secured Lending and Rand Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	1	6	2	0	2.11
Rand Capital	1	0	0	0	1.00

Carlyle Secured Lending currently has a consensus target price of $14.33, indicating a potential upside of 19.54%. Given Carlyle Secured Lending’s stronger consensus rating and higher possible upside, research analysts clearly believe Carlyle Secured Lending is more favorable than Rand Capital.

Dividends

Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 13.3%. Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 11.3%. 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. Rand Capital pays out -27.6% of its earnings in the form of a dividend.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Carlyle Secured Lending	30.18%	9.24%	4.29%
Rand Capital	-164.74%	7.12%	6.80%

Risk and Volatility

Carlyle Secured Lending has a beta of 0.7, indicating that its share price is 30% less volatile than the S&P 500. Comparatively, Rand Capital has a beta of 0.2, indicating that its share price is 80% less volatile than the S&P 500.

Earnings & Valuation

This table compares Carlyle Secured Lending and Rand Capital”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	$232.59 million	2.63	$88.98 million	$1.18	10.16
Rand Capital	$8.56 million	3.57	$8.83 million	($4.20)	-2.45

Carlyle Secured Lending has higher revenue and earnings than Rand Capital. Rand Capital 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.

Summary

Carlyle Secured Lending beats Rand Capital on 12 of the 16 factors compared between the two stocks.

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 Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.