TCG BDC (NASDAQ: CGBD) and Federal Agricultural Mortgage Corporation (NYSE:AGM) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their earnings, risk, analyst recommendations, valuation, institutional ownership, dividends and profitability.
Analyst Ratings
This is a breakdown of recent recommendations for TCG BDC and Federal Agricultural Mortgage Corporation, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| TCG BDC | 0 | 0 | 4 | 0 | 3.00 |
| Federal Agricultural Mortgage Corporation | 0 | 1 | 0 | 0 | 2.00 |
TCG BDC presently has a consensus price target of $19.13, suggesting a potential upside of 3.38%. Federal Agricultural Mortgage Corporation has a consensus price target of $65.00, suggesting a potential downside of 2.84%. Given TCG BDC’s stronger consensus rating and higher possible upside, equities analysts plainly believe TCG BDC is more favorable than Federal Agricultural Mortgage Corporation.
Dividends
TCG BDC pays an annual dividend of $1.48 per share and has a dividend yield of 8.0%. Federal Agricultural Mortgage Corporation pays an annual dividend of $1.44 per share and has a dividend yield of 2.2%. Federal Agricultural Mortgage Corporation pays out 19.8% of its earnings in the form of a dividend. Federal Agricultural Mortgage Corporation has raised its dividend for 5 consecutive years.
Profitability
This table compares TCG BDC and Federal Agricultural Mortgage Corporation’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| TCG BDC | 57.79% | 9.96% | 5.45% |
| Federal Agricultural Mortgage Corporation | 24.02% | 15.01% | 0.41% |
Insider and Institutional Ownership
2.3% of TCG BDC shares are held by institutional investors. Comparatively, 64.1% of Federal Agricultural Mortgage Corporation shares are held by institutional investors. 0.1% of TCG BDC shares are held by company insiders. Comparatively, 3.8% of Federal Agricultural Mortgage Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Valuation and Earnings
This table compares TCG BDC and Federal Agricultural Mortgage Corporation’s top-line revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | EBITDA | Earnings Per Share | Price/Earnings Ratio | |
| TCG BDC | N/A | N/A | N/A | N/A | N/A |
| Federal Agricultural Mortgage Corporation | $180.87 million | 3.92 | $77.09 million | $7.27 | 9.20 |
Federal Agricultural Mortgage Corporation has higher revenue and earnings than TCG BDC.
Summary
TCG BDC beats Federal Agricultural Mortgage Corporation on 7 of the 12 factors compared between the two stocks.
TCG BDC Company Profile
TCG BDC, Inc., formerly Carlyle GMS Finance, Inc., is a managed and non-diversified closed-end investment company. The Company is focused on lending to middle market companies. The Company’s investment objective is to generate current income and capital appreciation primarily through debt investments in the United States and middle market companies. The Company seeks to achieve its investment objective primarily through direct originations of secured debt, including first lien senior secured loans and second lien senior secured loans. The Company’s first lien senior secured loans include stand-alone first lien loans, first lien/last out loans, and unitranche loans. Second lien senior secured loans (Middle Market Senior Loans), with the balance of its assets invested yielding in higher investments include unsecured debt, mezzanine debt and investments in equities. The Company’s investment adviser is Carlyle GMS Investment Management L.L.C.
Federal Agricultural Mortgage Corporation Company Profile
Federal Agricultural Mortgage Corporation (Farmer Mac) provides a secondary market for a range of loans made to borrowers in rural America. The Company’s segments include Farm & Ranch, USDA Guarantees, Rural Utilities, Institutional Credit and Corporate. Its secondary market activities are purchasing eligible loans directly from lenders; providing advances against eligible loans by purchasing obligations secured by those loans; securitizing assets and guaranteeing the payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of eligible loans; and issuing long-term standby purchase commitments (LTSPCs) for eligible loans. The loans eligible for the secondary market provided by Farmer Mac include mortgage loans secured by first liens on agricultural real estate, including part-time farms and rural housing (comprising the assets eligible for the Farm & Ranch line of business).
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