Carlyle Secured Lending (NASDAQ:CGBD) & Bain Capital Specialty Finance (NYSE:BCSF) Head-To-Head Contrast

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

Analyst Recommendations

This is a summary of current recommendations and price targets for Carlyle Secured Lending and Bain Capital Specialty Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	1	6	2	0	2.11
Bain Capital Specialty Finance	0	1	2	0	2.67

Carlyle Secured Lending currently has a consensus price target of $14.33, indicating a potential upside of 11.72%. Bain Capital Specialty Finance has a consensus price target of $15.50, indicating a potential upside of 8.70%. Given Carlyle Secured Lending’s higher probable upside, analysts plainly believe Carlyle Secured Lending is more favorable than Bain Capital Specialty Finance.

Profitability

This table compares Carlyle Secured Lending and Bain Capital Specialty Finance’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%
Bain Capital Specialty Finance	33.45%	11.03%	4.66%

Institutional & 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, 0.6% of Bain Capital Specialty Finance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Dividends

Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 12.5%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 11.8%. 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. Bain Capital Specialty Finance pays out 116.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance has raised its dividend for 4 consecutive years.

Valuation and Earnings

This table compares Carlyle Secured Lending and Bain Capital Specialty Finance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carlyle Secured Lending	$84.16 million	7.77	$88.98 million	$1.18	10.87
Bain Capital Specialty Finance	$110.18 million	8.40	$119.42 million	$1.44	9.90

Bain Capital Specialty Finance has higher revenue and earnings than Carlyle Secured Lending. Bain Capital Specialty Finance 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.

Risk and Volatility

Carlyle Secured Lending has a beta of 0.69, meaning that its share price is 31% less volatile than the S&P 500. Comparatively, Bain Capital Specialty Finance has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500.

Summary

Bain Capital Specialty Finance beats Carlyle Secured Lending on 11 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 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.