THL Credit (NASDAQ: TCRD) and Invesco California Value Municipal Income Trust (NYSE:VCV) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their analyst recommendations, risk, dividends, profitability, earnings, institutional ownership and valuation.

Volatility & Risk

THL Credit has a beta of 1.08, suggesting that its stock price is 8% more volatile than the S&P 500. Comparatively, Invesco California Value Municipal Income Trust has a beta of -0.1, suggesting that its stock price is 110% less volatile than the S&P 500.

Valuation and Earnings

This table compares THL Credit and Invesco California Value Municipal Income Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
THL Credit N/A N/A N/A $0.74 12.70
Invesco California Value Municipal Income Trust N/A N/A N/A N/A N/A

Profitability

This table compares THL Credit and Invesco California Value Municipal Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
THL Credit 29.81% 10.22% 5.66%
Invesco California Value Municipal Income Trust N/A N/A N/A

Analyst Recommendations

This is a summary of recent ratings for THL Credit and Invesco California Value Municipal Income Trust, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
THL Credit 0 5 2 0 2.29
Invesco California Value Municipal Income Trust 0 0 0 0 N/A

THL Credit currently has a consensus target price of $11.00, suggesting a potential upside of 17.02%. Given THL Credit’s higher probable upside, analysts clearly believe THL Credit is more favorable than Invesco California Value Municipal Income Trust.

Institutional and Insider Ownership

45.6% of THL Credit shares are owned by institutional investors. Comparatively, 8.4% of Invesco California Value Municipal Income Trust shares are owned by institutional investors. 0.8% of THL Credit shares are owned by company insiders. Comparatively, 1.0% of Invesco California Value Municipal Income Trust shares are owned 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.

Dividends

THL Credit pays an annual dividend of $1.08 per share and has a dividend yield of 11.5%. Invesco California Value Municipal Income Trust pays an annual dividend of $0.64 per share and has a dividend yield of 4.9%. THL Credit pays out 145.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

THL Credit beats Invesco California Value Municipal Income Trust on 8 of the 10 factors compared between the two stocks.

THL Credit Company Profile

THL Credit, Inc. is an externally managed, non-diversified closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated debt and equity securities of lower middle market companies. The Company is a direct lender to lower middle-market companies and invests primarily in directly originated first lien senior secured loans, including unitranche investments. In certain instances, it also makes second lien secured loans and subordinated, or mezzanine, debt investments, which may include an associated equity component, such as warrants, preferred stock or similar securities, and direct equity investments. Its first lien senior secured loans may be structured as traditional first lien senior secured loans or as unitranche loans. The Company’s investment activities are managed by THL Credit Advisors LLC.

Invesco California Value Municipal Income Trust Company Profile

Invesco Van Kampen California Value Municipal Income Trust (the Trust), formerly Invesco California Value Municipal Income Trust, is a diversified, closed-end management investment trust. The Trust’s investment objective is to seek to provide common shareholders with a high level of current income exempt from federal and California income taxes, consistent with preservation of capital. The Trust will invest substantially all of its assets in California municipal securities rated investment grade at the time of investment. The Trust seeks to achieve its investment objective by investing primarily in California municipal securities that are rated investment grade at the time of investment. Municipal securities include municipal bonds, municipal notes, municipal commercial paper and lease obligations. Invesco Advisers, Inc. serves as its investment advisor.

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