Rand Capital (NASDAQ:RAND) & Carlyle Secured Lending (NASDAQ:CGBD) Critical Comparison

Rand Capital (NASDAQ:RAND) and Carlyle Secured Lending (NASDAQ:CGBD) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their risk, earnings, profitability, analyst recommendations, institutional ownership, valuation and dividends.

Institutional & Insider Ownership

24.5% of Carlyle Secured Lending shares are held by institutional investors. 68.2% of Rand Capital shares are held by insiders. Comparatively, 0.6% of Carlyle Secured Lending shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 10.9%. Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 13.6%. Rand Capital pays out -27.6% of its earnings in the form of a dividend. Carlyle Secured Lending pays out 135.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Rand Capital and Carlyle Secured Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rand Capital	-164.74%	7.12%	6.80%
Carlyle Secured Lending	30.18%	9.24%	4.29%

Valuation and Earnings

This table compares Rand Capital and Carlyle Secured Lending”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rand Capital	$8.56 million	3.70	$8.83 million	($4.20)	-2.54
Carlyle Secured Lending	$232.59 million	2.58	$88.98 million	$1.18	9.98

Carlyle Secured Lending has higher revenue and earnings than Rand Capital. Rand Capital is trading at a lower price-to-earnings ratio than Carlyle Secured Lending, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent ratings and price targets for Rand Capital and Carlyle Secured Lending, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rand Capital	1	0	0	0	1.00
Carlyle Secured Lending	1	6	2	0	2.11

Carlyle Secured Lending has a consensus target price of $14.33, suggesting a potential upside of 21.68%. Given Carlyle Secured Lending’s stronger consensus rating and higher possible upside, analysts clearly believe Carlyle Secured Lending is more favorable than Rand Capital.

Risk and Volatility

Rand Capital has a beta of 0.2, meaning that its stock price is 80% less volatile than the S&P 500. Comparatively, Carlyle Secured Lending has a beta of 0.7, meaning that its stock price is 30% less volatile than the S&P 500.

Summary

Carlyle Secured Lending beats Rand Capital on 12 of the 16 factors compared between the two stocks.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.

About Carlyle Secured Lending

Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.