Moelis & Company (NYSE:MC) & Bain Capital Specialty Finance (NYSE:BCSF) Critical Survey

Bain Capital Specialty Finance (NYSE:BCSF) and Moelis & Company (NYSE:MC) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their earnings, valuation, profitability, institutional ownership, analyst recommendations, dividends and risk.

Profitability

This table compares Bain Capital Specialty Finance and Moelis & Company’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bain Capital Specialty Finance	24.22%	10.40%	4.33%
Moelis & Company	14.50%	39.59%	17.04%

Institutional & Insider Ownership

91.5% of Moelis & Company shares are owned by institutional investors. 0.6% of Bain Capital Specialty Finance shares are owned by company insiders. Comparatively, 6.3% of Moelis & Company shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Risk & Volatility

Bain Capital Specialty Finance has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Moelis & Company has a beta of 1.87, meaning that its share price is 87% more volatile than the S&P 500.

Dividends

Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 15.4%. Moelis & Company pays an annual dividend of $2.60 per share and has a dividend yield of 4.3%. Bain Capital Specialty Finance pays out 169.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Moelis & Company pays out 90.6% 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 has raised its dividend for 4 consecutive years and Moelis & Company has raised its dividend for 1 consecutive years. Bain Capital Specialty Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Bain Capital Specialty Finance and Moelis & Company”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bain Capital Specialty Finance	$78.39 million	9.04	$98.76 million	$0.99	11.03
Moelis & Company	$1.52 billion	3.15	$233.04 million	$2.87	21.29

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

Analyst Recommendations

This is a summary of current ratings for Bain Capital Specialty Finance and Moelis & Company, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bain Capital Specialty Finance	0	4	0	0	2.00
Moelis & Company	0	6	2	0	2.25

Bain Capital Specialty Finance currently has a consensus target price of $12.60, indicating a potential upside of 15.36%. Moelis & Company has a consensus target price of $68.83, indicating a potential upside of 12.63%. Given Bain Capital Specialty Finance’s higher possible upside, equities research analysts plainly believe Bain Capital Specialty Finance is more favorable than Moelis & Company.

Summary

Moelis & Company beats Bain Capital Specialty Finance on 12 of the 17 factors compared between the two stocks.

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.

About Moelis & Company

Moelis & Co. operates as a holding company. It engages in the provision of financial advisory, capital raising and asset management services to a client base including corporations, governments, sovereign wealth funds and financial sponsors. The firm focuses on clients including large public multinational corporations, middle market private companies, financial sponsors, entrepreneurs and governments. The company was founded by Kenneth David Moelis, Navid Mahmoodzadegan, Jeffrey Raich and Elizabeth Ann Crain in July 2007 and is headquartered in New York, NY.