StoneCastle Financial Corp (NASDAQ: BANX) and Medley Capital Corporation (NYSE:MCC) are both small-cap finance companies, but which is the better investment? We will contrast the two companies based on the strength of their institutional ownership, earnings, risk, dividends, valuation, analyst recommendations and profitability.
StoneCastle Financial Corp pays an annual dividend of $1.48 per share and has a dividend yield of 7.2%. Medley Capital Corporation pays an annual dividend of $0.64 per share and has a dividend yield of 10.9%. StoneCastle Financial Corp pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medley Capital Corporation pays out -640.0% of its earnings in the form of a dividend. Medley Capital Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional & Insider Ownership
34.0% of StoneCastle Financial Corp shares are held by institutional investors. Comparatively, 29.6% of Medley Capital Corporation shares are held by institutional investors. 8.0% of StoneCastle Financial Corp shares are held by insiders. Comparatively, 8.7% of Medley Capital Corporation shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.
Earnings & Valuation
This table compares StoneCastle Financial Corp and Medley Capital Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|StoneCastle Financial Corp||N/A||N/A||N/A||$1.74||11.75|
|Medley Capital Corporation||N/A||N/A||N/A||($0.10)||-58.80|
Medley Capital Corporation is trading at a lower price-to-earnings ratio than StoneCastle Financial Corp, indicating that it is currently the more affordable of the two stocks.
This is a breakdown of recent recommendations for StoneCastle Financial Corp and Medley Capital Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|StoneCastle Financial Corp||0||0||4||0||3.00|
|Medley Capital Corporation||0||5||0||0||2.00|
StoneCastle Financial Corp currently has a consensus price target of $22.38, suggesting a potential upside of 9.42%. Medley Capital Corporation has a consensus price target of $7.00, suggesting a potential upside of 19.05%. Given Medley Capital Corporation’s higher possible upside, analysts clearly believe Medley Capital Corporation is more favorable than StoneCastle Financial Corp.
Risk and Volatility
StoneCastle Financial Corp has a beta of 0.2, suggesting that its stock price is 80% less volatile than the S&P 500. Comparatively, Medley Capital Corporation has a beta of 1.2, suggesting that its stock price is 20% more volatile than the S&P 500.
This table compares StoneCastle Financial Corp and Medley Capital Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|StoneCastle Financial Corp||66.25%||N/A||N/A|
|Medley Capital Corporation||-6.07%||8.04%||3.92%|
Medley Capital Corporation beats StoneCastle Financial Corp on 7 of the 13 factors compared between the two stocks.
About StoneCastle Financial Corp
StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.
About Medley Capital Corporation
Medley Capital Corporation is a non-diversified closed-end management investment company. The Company’s investment objective is to generate current income and capital appreciation by lending directly to privately-held middle market companies, primarily through directly originated transactions to help these companies expand their business, refinance and make acquisitions. Its investment portfolio includes senior secured first lien term loans, senior secured second lien term loans, unitranche, senior secured first lien notes, subordinated notes and warrants and minority equity securities. It may invest up to 100% of its assets in securities acquired directly from issuers in privately negotiated transactions. Its portfolio of investments includes industries, including banking, finance, insurance and real estate; construction and building; healthcare and pharmaceuticals; beverage and food, and telecommunications. MCC Advisors LLC is the Company’s investment advisor.
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