Financial Survey: Kayne Anderson BDC (NYSE:KBDC) vs. SLR Investment (NASDAQ:SLRC)

SLR Investment (NASDAQ:SLRC) and Kayne Anderson BDC (NYSE:KBDC) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, risk, earnings, analyst recommendations, valuation and profitability.

Institutional & Insider Ownership

35.3% of SLR Investment shares are held by institutional investors. 8.8% of SLR Investment shares are held by company insiders. Comparatively, 3.2% of Kayne Anderson BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Profitability

This table compares SLR Investment and Kayne Anderson BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
SLR Investment	41.00%	8.98%	3.56%
Kayne Anderson BDC	46.55%	10.40%	5.44%

Dividends

SLR Investment pays an annual dividend of $1.64 per share and has a dividend yield of 10.5%. Kayne Anderson BDC pays an annual dividend of $1.60 per share and has a dividend yield of 10.4%. SLR Investment pays out 99.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Kayne Anderson BDC pays out 106.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. SLR Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Ratings

This is a breakdown of recent recommendations for SLR Investment and Kayne Anderson BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
SLR Investment	2	3	2	1	2.25
Kayne Anderson BDC	0	1	3	0	2.75

SLR Investment currently has a consensus target price of $16.04, indicating a potential upside of 3.06%. Kayne Anderson BDC has a consensus target price of $15.50, indicating a potential upside of 1.09%. Given SLR Investment’s higher possible upside, equities analysts clearly believe SLR Investment is more favorable than Kayne Anderson BDC.

Earnings and Valuation

This table compares SLR Investment and Kayne Anderson BDC”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
SLR Investment	$232.43 million	N/A	$95.76 million	$1.65	9.43
Kayne Anderson BDC	$213.11 million	4.92	$131.94 million	$1.51	10.15

Kayne Anderson BDC has lower revenue, but higher earnings than SLR Investment. SLR Investment is trading at a lower price-to-earnings ratio than Kayne Anderson BDC, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

SLR Investment has a beta of 0.7, meaning that its share price is 30% less volatile than the S&P 500. Comparatively, Kayne Anderson BDC has a beta of 0.11, meaning that its share price is 89% less volatile than the S&P 500.

Summary

SLR Investment beats Kayne Anderson BDC on 9 of the 16 factors compared between the two stocks.

About SLR Investment

SLR Investment Corp. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, leveraged buyouts, acquisitions, recapitalizations, general refinancing, growth capital and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate activities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non-precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities. It also invests in life sciences with focus on specialty pharmaceuticals, medical devices, biotech, health Care Providers and services; health Care technology, enabling technologies and tools. The fund primarily invests in United States. The fund’s investments generally range between $5 million and $100 million. The fund invests in companies with revenues between $50 million and $1 billion and EBITDA between $15 million and $100 million. It invests in the form of senior secured loans, mezzanine loans, and equity securities. It may also seek investments in thinly traded public companies and also make secondary investments. The fund makes non-control equity investments. It primarily exits within three years of the initial capital commitment.

About Kayne Anderson BDC

Kayne Anderson BDC Inc. is a business development company which invests primarily in first lien senior secured loans, with a secondary focus on unitranche and split-lien loans to middle market companies. Kayne Anderson BDC Inc. is based in CHICAGO.