Eagle Point Credit (NYSE:ECC) versus Monroe Capital (NASDAQ:MRCC) Critical Comparison

Eagle Point Credit (NYSE:ECC) and Monroe Capital (NASDAQ:MRCC) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their valuation, analyst recommendations, earnings, profitability, institutional ownership, dividends and risk.

Volatility & Risk

Eagle Point Credit has a beta of 0.39, indicating that its share price is 61% less volatile than the S&P 500. Comparatively, Monroe Capital has a beta of 0.92, indicating that its share price is 8% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current recommendations and price targets for Eagle Point Credit and Monroe Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Eagle Point Credit	0	2	3	1	2.83
Monroe Capital	1	2	0	0	1.67

Eagle Point Credit presently has a consensus price target of $8.21, indicating a potential upside of 31.02%. Monroe Capital has a consensus price target of $7.63, indicating a potential upside of 11.48%. Given Eagle Point Credit’s stronger consensus rating and higher probable upside, analysts clearly believe Eagle Point Credit is more favorable than Monroe Capital.

Dividends

Eagle Point Credit pays an annual dividend of $1.82 per share and has a dividend yield of 29.1%. Monroe Capital pays an annual dividend of $1.00 per share and has a dividend yield of 14.6%. Eagle Point Credit pays out 1,654.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Monroe Capital pays out 1,111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Eagle Point Credit and Monroe Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Eagle Point Credit	$31.03 million	15.54	$85.49 million	$0.11	56.95
Monroe Capital	$60.53 million	2.45	$9.70 million	$0.09	76.00

Eagle Point Credit has higher earnings, but lower revenue than Monroe Capital. Eagle Point Credit is trading at a lower price-to-earnings ratio than Monroe Capital, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Eagle Point Credit and Monroe Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Eagle Point Credit	6.73%	13.49%	8.59%
Monroe Capital	3.74%	10.70%	4.38%

Institutional and Insider Ownership

19.5% of Eagle Point Credit shares are held by institutional investors. 0.2% of Eagle Point Credit shares are held by insiders. Comparatively, 3.8% of Monroe Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Eagle Point Credit beats Monroe Capital on 12 of the 17 factors compared between the two stocks.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.

About Monroe Capital

Monroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.