Head-To-Head Review: Investcorp Credit Management BDC (NASDAQ:ICMB) and WhiteHorse Finance (NASDAQ:WHF)

WhiteHorse Finance (NASDAQ:WHF) and Investcorp Credit Management BDC (NASDAQ:ICMB) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, earnings, analyst recommendations, institutional ownership, risk and valuation.

Volatility and Risk

WhiteHorse Finance has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Investcorp Credit Management BDC has a beta of 0.43, indicating that its share price is 57% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent recommendations for WhiteHorse Finance and Investcorp Credit Management BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
WhiteHorse Finance	2	3	0	0	1.60
Investcorp Credit Management BDC	1	0	0	0	1.00

WhiteHorse Finance currently has a consensus target price of $7.75, suggesting a potential upside of 18.50%. Given WhiteHorse Finance’s stronger consensus rating and higher possible upside, research analysts plainly believe WhiteHorse Finance is more favorable than Investcorp Credit Management BDC.

Dividends

WhiteHorse Finance pays an annual dividend of $1.00 per share and has a dividend yield of 15.3%. Investcorp Credit Management BDC pays an annual dividend of $0.48 per share and has a dividend yield of 16.4%. WhiteHorse Finance pays out 232.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Investcorp Credit Management BDC pays out -4,800.0% of its earnings in the form of a dividend. WhiteHorse Finance has raised its dividend for 3 consecutive years and Investcorp Credit Management BDC has raised its dividend for 1 consecutive years. Investcorp Credit Management BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares WhiteHorse Finance and Investcorp Credit Management BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
WhiteHorse Finance	12.91%	9.93%	4.14%
Investcorp Credit Management BDC	-0.30%	3.33%	1.19%

Earnings & Valuation

This table compares WhiteHorse Finance and Investcorp Credit Management BDC”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
WhiteHorse Finance	$92.82 million	1.64	$10.85 million	$0.43	15.21
Investcorp Credit Management BDC	$23.88 million	1.76	-$144,200.00	($0.01)	-292.00

WhiteHorse Finance has higher revenue and earnings than Investcorp Credit Management BDC. Investcorp Credit Management BDC is trading at a lower price-to-earnings ratio than WhiteHorse Finance, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

13.2% of WhiteHorse Finance shares are owned by institutional investors. Comparatively, 7.8% of Investcorp Credit Management BDC shares are owned by institutional investors. 2.5% of WhiteHorse Finance shares are owned by insiders. Comparatively, 1.3% of Investcorp Credit Management BDC shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Summary

WhiteHorse Finance beats Investcorp Credit Management BDC on 13 of the 16 factors compared between the two stocks.

About WhiteHorse Finance

WhiteHorse Finance, Inc. is business development company, non-diversified, closed end management company specializing in originating senior secured loans, lower middle market, growth capital industries. It invests in broadline retail, office services and supplies, building products, health care services, health care supplies, research and consulting services, application software, home furnishings, specialized consumer services, data processing and outsourced services, leisure facilities, cable, and satellite. It prefers to invest in United States. It typically invests between $5 million to $25 million in companies having enterprise value of between $50 million and $350 million.

About Investcorp Credit Management BDC

Investcorp Credit Management BDC, Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, acquisitions, market/product expansion, organic growth, refinancings and recapitalization investments. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest between $5 million to $25 million in companies that have annual revenues of at least $50 million with EBITDA at least $15 million.