Comparing Triangle Capital (TCAP) & Fifth Street Asset Management (FSAM)

Triangle Capital (NYSE: TCAP) and Fifth Street Asset Management (OTCMKTS:FSAM) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, dividends, institutional ownership, earnings, risk and analyst recommendations.

Dividends

Triangle Capital pays an annual dividend of $1.20 per share and has a dividend yield of 10.6%. Fifth Street Asset Management does not pay a dividend. Triangle Capital pays out 77.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings and Valuation

This table compares Triangle Capital and Fifth Street Asset Management’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Triangle Capital $123.00 million 4.41 -$28.65 million $1.55 7.29
Fifth Street Asset Management $82.55 million 0.81 -$1.53 million N/A N/A

Fifth Street Asset Management has lower revenue, but higher earnings than Triangle Capital.

Profitability

This table compares Triangle Capital and Fifth Street Asset Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Triangle Capital -17.98% 10.25% 5.54%
Fifth Street Asset Management -20.92% N/A -2.71%

Institutional and Insider Ownership

49.5% of Triangle Capital shares are owned by institutional investors. Comparatively, 0.1% of Fifth Street Asset Management shares are owned by institutional investors. 3.5% of Triangle Capital shares are owned by company insiders. Comparatively, 85.4% of Fifth Street Asset Management shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current recommendations and price targets for Triangle Capital and Fifth Street Asset Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Triangle Capital 3 5 3 0 2.00
Fifth Street Asset Management 0 0 0 0 N/A

Triangle Capital presently has a consensus target price of $13.90, suggesting a potential upside of 23.01%. Given Triangle Capital’s higher probable upside, analysts plainly believe Triangle Capital is more favorable than Fifth Street Asset Management.

Volatility and Risk

Triangle Capital has a beta of 0.75, indicating that its share price is 25% less volatile than the S&P 500. Comparatively, Fifth Street Asset Management has a beta of 0.1, indicating that its share price is 90% less volatile than the S&P 500.

Summary

Triangle Capital beats Fifth Street Asset Management on 11 of the 14 factors compared between the two stocks.

About Triangle Capital

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic. The firm makes equity investments between $1 million and $25 million and debt investments between $5 million and $30 million per transaction, in companies having annual revenues between $20 million and $200 million and EBITDA between $3 million and $35 million and can also co-invest. It typically makes investments between $5 million and $35 million. It primarily invests in senior subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The firm also invests in senior debt securities secured by first lien security interests in portfolio companies. Triangle Capital Corporation was incorporated on October 10, 2006 and is based in Raleigh, North Carolina.

About Fifth Street Asset Management

Fifth Street Asset Management Inc. is an asset management holding company. The firm provides asset management services through its subsidiaries. Fifth Street Asset Management Inc. was founded in 1998 and is headquartered in Greenwich, Connecticut.

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