Nuveen Churchill Direct Lending (NYSE:NCDL – Get Free Report) and Saratoga Investment (NYSE:SAR – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their risk, institutional ownership, profitability, earnings, valuation, analyst recommendations and dividends.
Dividends
Nuveen Churchill Direct Lending pays an annual dividend of $1.80 per share and has a dividend yield of 12.7%. Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.1%. Nuveen Churchill Direct Lending pays out 117.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Saratoga Investment pays out 123.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Analyst Recommendations
This is a breakdown of recent ratings and recommmendations for Nuveen Churchill Direct Lending and Saratoga Investment, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Nuveen Churchill Direct Lending | 0 | 4 | 1 | 0 | 2.20 |
| Saratoga Investment | 0 | 6 | 0 | 0 | 2.00 |
Institutional and Insider Ownership
19.1% of Saratoga Investment shares are held by institutional investors. 0.6% of Nuveen Churchill Direct Lending shares are held by company insiders. Comparatively, 10.0% of Saratoga Investment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
Profitability
This table compares Nuveen Churchill Direct Lending and Saratoga Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Nuveen Churchill Direct Lending | 36.83% | 11.13% | 4.83% |
| Saratoga Investment | 30.61% | 9.19% | 3.09% |
Volatility and Risk
Nuveen Churchill Direct Lending has a beta of 0.4, suggesting that its share price is 60% less volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.56, suggesting that its share price is 44% less volatile than the S&P 500.
Valuation and Earnings
This table compares Nuveen Churchill Direct Lending and Saratoga Investment”s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Nuveen Churchill Direct Lending | $224.04 million | 3.11 | $116.32 million | $1.53 | 9.23 |
| Saratoga Investment | $148.85 million | 2.49 | $28.09 million | $2.44 | 9.38 |
Nuveen Churchill Direct Lending has higher revenue and earnings than Saratoga Investment. Nuveen Churchill Direct Lending is trading at a lower price-to-earnings ratio than Saratoga Investment, indicating that it is currently the more affordable of the two stocks.
Summary
Nuveen Churchill Direct Lending beats Saratoga Investment on 10 of the 16 factors compared between the two stocks.
About Nuveen Churchill Direct Lending
Nuveen Churchill Direct Lending Corp. is a specialty finance company focused primarily on investing in senior secured loans to private equity-owned U.S. middle market companies. It has elected to be regulated as a business development company. Nuveen Churchill Direct Lending Corp. is based in NEW YORK.
About Saratoga Investment
Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.
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