Carlyle Secured Lending (NASDAQ:CGBD) & MidCap Financial Investment (NASDAQ:MFIC) Critical Survey

Carlyle Secured Lending (NASDAQ:CGBD) and MidCap Financial Investment (NASDAQ:MFIC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, earnings, profitability, dividends, risk and institutional ownership.

Profitability

This table compares Carlyle Secured Lending and MidCap Financial Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Carlyle Secured Lending	14.26%	8.85%	3.90%
MidCap Financial Investment	-9.85%	11.17%	4.41%

Valuation & Earnings

This table compares Carlyle Secured Lending and MidCap Financial Investment”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Carlyle Secured Lending	$255.57 million	3.01	$69.97 million	$0.51	21.90
MidCap Financial Investment	$320.88 million	2.63	$63.17 million	($0.36)	-28.50

Carlyle Secured Lending has higher earnings, but lower revenue than MidCap Financial Investment. MidCap Financial Investment 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 breakdown of recent ratings and target prices for Carlyle Secured Lending and MidCap Financial Investment, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Carlyle Secured Lending	0	5	1	0	2.17
MidCap Financial Investment	1	8	0	0	1.89

Carlyle Secured Lending currently has a consensus price target of $11.25, suggesting a potential upside of 0.72%. MidCap Financial Investment has a consensus price target of $10.39, suggesting a potential upside of 1.29%. Given MidCap Financial Investment’s higher probable upside, analysts plainly believe MidCap Financial Investment is more favorable than Carlyle Secured Lending.

Institutional and Insider Ownership

24.5% of Carlyle Secured Lending shares are owned by institutional investors. Comparatively, 28.4% of MidCap Financial Investment shares are owned by institutional investors. 0.3% of Carlyle Secured Lending shares are owned by insiders. Comparatively, 0.9% of MidCap Financial Investment shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Carlyle Secured Lending pays an annual dividend of $1.40 per share and has a dividend yield of 12.5%. MidCap Financial Investment pays an annual dividend of $1.24 per share and has a dividend yield of 12.1%. Carlyle Secured Lending pays out 274.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MidCap Financial Investment pays out -344.4% of its earnings in the form of a dividend.

Volatility & Risk

Carlyle Secured Lending has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, MidCap Financial Investment has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500.

Summary

Carlyle Secured Lending beats MidCap Financial Investment on 9 of the 16 factors compared between the two stocks.

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.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.