Falcon Minerals (NASDAQ:FLMN) and Bain Capital Specialty Finance (NYSE:BCSF) are both small-cap oils/energy companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, analyst recommendations, risk, profitability and earnings.

Insider and Institutional Ownership

65.4% of Falcon Minerals shares are held by institutional investors. Comparatively, 9.4% of Bain Capital Specialty Finance shares are held by institutional investors. 8.6% of Falcon Minerals shares are held by company insiders. Comparatively, 0.2% of Bain Capital Specialty Finance shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Falcon Minerals and Bain Capital Specialty Finance’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Falcon Minerals $97.20 million 7.19 $90.13 million $0.20 40.70
Bain Capital Specialty Finance $99.29 million 9.77 $26.65 million $1.45 12.96

Falcon Minerals has higher earnings, but lower revenue than Bain Capital Specialty Finance. Bain Capital Specialty Finance is trading at a lower price-to-earnings ratio than Falcon Minerals, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Falcon Minerals and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Falcon Minerals N/A 12.62% 8.68%
Bain Capital Specialty Finance 44.85% 7.23% 4.02%

Dividends

Falcon Minerals pays an annual dividend of $0.80 per share and has a dividend yield of 9.8%. Bain Capital Specialty Finance pays an annual dividend of $1.64 per share and has a dividend yield of 8.7%. Falcon Minerals pays out 400.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance pays out 113.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Falcon Minerals and Bain Capital Specialty Finance, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Falcon Minerals 0 2 4 0 2.67
Bain Capital Specialty Finance 0 2 3 0 2.60

Falcon Minerals presently has a consensus price target of $10.42, suggesting a potential upside of 27.97%. Bain Capital Specialty Finance has a consensus price target of $20.25, suggesting a potential upside of 7.77%. Given Falcon Minerals’ stronger consensus rating and higher possible upside, equities research analysts clearly believe Falcon Minerals is more favorable than Bain Capital Specialty Finance.

Summary

Falcon Minerals beats Bain Capital Specialty Finance on 10 of the 15 factors compared between the two stocks.

About Falcon Minerals

Falcon Minerals Corporation acquires and owns mineral, royalty, and over-riding royalty interests in oil and natural gas properties in North America. It owns interests covering approximately 256,000 gross unit acres in the Eagle Ford Shale and Austin Chalk in Karnes, DeWitt, and Gonzales Counties in Texas, as well as approximately 68,000 gross unit acres in Pennsylvania, Ohio, and West Virginia that is prospective for the Marcellus Shale. The company is based in Philadelphia, Pennsylvania.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. operates as a business development company (BDC) 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.

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