Fifth Street Senior Floating Rate Corp. (FSFR) and TICC Capital Corp. (TICC) Critical Review

Fifth Street Senior Floating Rate Corp. (NASDAQ: FSFR) and TICC Capital Corp. (NASDAQ:TICC) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their institutional ownership, risk, valuation, dividends, analyst recommendations, earnings and profitability.

Earnings & Valuation

This table compares Fifth Street Senior Floating Rate Corp. and TICC Capital Corp.’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Fifth Street Senior Floating Rate Corp. N/A N/A N/A $0.47 18.92
TICC Capital Corp. $70.44 million 4.89 $91.12 million $1.77 3.78

TICC Capital Corp. has higher revenue and earnings than Fifth Street Senior Floating Rate Corp.. TICC Capital Corp. is trading at a lower price-to-earnings ratio than Fifth Street Senior Floating Rate Corp., indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Fifth Street Senior Floating Rate Corp. and TICC Capital Corp.’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Fifth Street Senior Floating Rate Corp. 29.89% 7.27% 3.83%
TICC Capital Corp. 142.50% 7.50% 4.53%

Risk and Volatility

Fifth Street Senior Floating Rate Corp. has a beta of 0.34, suggesting that its share price is 66% less volatile than the S&P 500. Comparatively, TICC Capital Corp. has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500.

Dividends

Fifth Street Senior Floating Rate Corp. pays an annual dividend of $0.76 per share and has a dividend yield of 8.5%. TICC Capital Corp. pays an annual dividend of $0.80 per share and has a dividend yield of 11.9%. Fifth Street Senior Floating Rate Corp. pays out 161.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TICC Capital Corp. pays out 45.2% of its earnings in the form of a dividend. TICC Capital Corp. is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings for Fifth Street Senior Floating Rate Corp. and TICC Capital Corp., as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Fifth Street Senior Floating Rate Corp. 0 2 0 0 2.00
TICC Capital Corp. 3 0 0 0 1.00

Fifth Street Senior Floating Rate Corp. currently has a consensus target price of $9.25, indicating a potential upside of 4.05%. TICC Capital Corp. has a consensus target price of $6.00, indicating a potential downside of 10.38%. Given Fifth Street Senior Floating Rate Corp.’s stronger consensus rating and higher possible upside, research analysts plainly believe Fifth Street Senior Floating Rate Corp. is more favorable than TICC Capital Corp..

Insider & Institutional Ownership

23.3% of Fifth Street Senior Floating Rate Corp. shares are held by institutional investors. Comparatively, 17.4% of TICC Capital Corp. shares are held by institutional investors. 0.4% of Fifth Street Senior Floating Rate Corp. shares are held by insiders. Comparatively, 5.9% of TICC Capital Corp. shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Summary

TICC Capital Corp. beats Fifth Street Senior Floating Rate Corp. on 9 of the 13 factors compared between the two stocks.

About Fifth Street Senior Floating Rate Corp.

Fifth Street Senior Floating Rate Corp. is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in portfolio companies primarily in the form of senior loans. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. Fifth Street Management LLC is the investment advisor of the Company.

About TICC Capital Corp.

TICC Capital Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its portfolio’s total return. The Company primarily focuses on seeking current income by investing primarily in corporate debt securities. The Company’s debt investments may include syndicated loans and bilateral loans. The Company holds interests in structured finance investments, including collateralized loan obligation (CLO) investment vehicles that own debt securities. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. The Company may also invest in publicly traded debt and/or equity securities. Its portfolio includes its investments in various industries, such as structured finance, telecommunication services, business services, printing and publishing, and financial intermediaries. TICC Management, LLC is its investment advisor.

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