MVC Capital (NYSE:MVC) and TCW Strategic Income Fund (NYSE:TSI) are both small-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.
Institutional and Insider Ownership
51.0% of MVC Capital shares are held by institutional investors. Comparatively, 29.6% of TCW Strategic Income Fund shares are held by institutional investors. 8.9% of MVC Capital shares are held by company insiders. Comparatively, 0.2% of TCW Strategic Income Fund shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.
This table compares MVC Capital and TCW Strategic Income Fund’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|TCW Strategic Income Fund||N/A||N/A||N/A|
MVC Capital pays an annual dividend of $0.68 per share and has a dividend yield of 7.6%. TCW Strategic Income Fund pays an annual dividend of $0.37 per share and has a dividend yield of 6.4%. MVC Capital pays out 340.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a summary of recent recommendations and price targets for MVC Capital and TCW Strategic Income Fund, as provided by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|TCW Strategic Income Fund||0||0||0||0||N/A|
MVC Capital currently has a consensus target price of $13.00, indicating a potential upside of 44.44%. Given MVC Capital’s higher probable upside, analysts plainly believe MVC Capital is more favorable than TCW Strategic Income Fund.
Volatility and Risk
MVC Capital has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, TCW Strategic Income Fund has a beta of 0.15, meaning that its stock price is 85% less volatile than the S&P 500.
Earnings and Valuation
This table compares MVC Capital and TCW Strategic Income Fund’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|MVC Capital||$22.89 million||6.97||-$10.53 million||$0.20||45.00|
|TCW Strategic Income Fund||N/A||N/A||N/A||N/A||N/A|
TCW Strategic Income Fund has lower revenue, but higher earnings than MVC Capital.
MVC Capital beats TCW Strategic Income Fund on 10 of the 11 factors compared between the two stocks.
About MVC Capital
MVC Capital, Inc. is a business development company specializing in equity, acquisition financing, mezzanine financing, management buyouts, leveraged buildups, corporate partnerships, PIPE transactions, going private transactions, private company recapitalizations, operational turnarounds, and growth and expansion capital transaction financing. The company seeks to invest in mature, small, and middle-market companies. It seeks to invest in companies in the consumer products, business services, industrial manufacturing and services, automotive retailing, energy, food and food service, financial services, insurance, industrial distribution and value-added distribution, medical devices and equipment, specialty chemicals, and security sectors. The company prefers to invest in companies based in the United States. The firm typically invests between $3 million and $25 million for control and non-control stakes in companies with revenues between $10 million and $150 million and EBITDA between $3 million and $25 million. It prefers to be the lead investor in transactions and also co-invests in companies with other private equity sponsors. The company invests in the form of preferred and common equity, and warrants or rights to acquire equity interests; bridge loans; term loans; debt; cash flow loans; senior and subordinated loans; convertible securities; venture capital; mezzanine; and private equity investments. It exits its investments in the form of maturity of loan, public offering, sale, mergers and acquisitions, and financial recapitalizations. It prefers to take majority stake in companies.
About TCW Strategic Income Fund
TCW Strategic Income Fund, Inc. is a close-ended balanced mutual fund launched by The TCW Group, Inc. The fund is managed by TCW Investment Management Company. It invests in the public equity and fixed income markets of the United States. The fund makes its investments in securities of companies operating across diversified sectors. For its equity investments, it seeks to invest in growth and value stocks of companies. The fund's fixed income investments are comprised of mortgage related securities, asset-backed securities, money market securities, convertible securities, high yield bonds, collateralized debt obligations (CDOs), and securities issued or guaranteed by the United States Government, its agencies and instrumentalities. It benchmarks the performance of its portfolio against the S&P 500 Index, NASDAQ, and a customized benchmark comprised of Barclays U.S. Aggregate Bond Index, Citigroup High Yield Cash Pay Index, S&P 500 Index, and BofA Merrill Lynch All Convertibles All Qualities. The fund was previously known as TCW Convertible Securities Fund, Inc. TCW Strategic Income Fund, Inc. was formed on January 13, 1987 and is domiciled in the United States.
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