Investcorp Credit Management BDC (NASDAQ:ICMB – Get Free Report) and Saratoga Investment (NYSE:SAR – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, dividends and analyst recommendations.
Profitability
This table compares Investcorp Credit Management BDC and Saratoga Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Investcorp Credit Management BDC | -118.71% | 2.26% | 0.75% |
| Saratoga Investment | 29.12% | 9.29% | 3.17% |
Analyst Ratings
This is a breakdown of current ratings for Investcorp Credit Management BDC and Saratoga Investment, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Investcorp Credit Management BDC | 1 | 0 | 0 | 0 | 1.00 |
| Saratoga Investment | 0 | 6 | 0 | 0 | 2.00 |
Institutional & Insider Ownership
7.8% of Investcorp Credit Management BDC shares are held by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are held by institutional investors. 1.3% of Investcorp Credit Management BDC shares are held by company insiders. Comparatively, 10.0% of Saratoga Investment shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.
Valuation & Earnings
This table compares Investcorp Credit Management BDC and Saratoga Investment”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Investcorp Credit Management BDC | $17.40 million | 1.14 | -$8.85 million | ($1.37) | -1.01 |
| Saratoga Investment | $125.71 million | 2.89 | $36.60 million | $2.33 | 9.58 |
Saratoga Investment has higher revenue and earnings than Investcorp Credit Management BDC. Investcorp Credit Management BDC is trading at a lower price-to-earnings ratio than Saratoga Investment, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Investcorp Credit Management BDC has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.56, meaning that its share price is 44% less volatile than the S&P 500.
Summary
Saratoga Investment beats Investcorp Credit Management BDC on 12 of the 13 factors compared between the two stocks.
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.
About Saratoga Investment
Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.
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