Critical Review: Barings Bdc (NYSE:BBDC) vs. Trinity Capital (NASDAQ:TRIN)

Barings Bdc (NYSE:BBDC) and Trinity Capital (NASDAQ:TRIN) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their valuation, earnings, institutional ownership, risk, dividends, analyst recommendations and profitability.

Analyst Ratings

This is a breakdown of current recommendations for Barings Bdc and Trinity Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Barings Bdc	0	2	2	0	2.50
Trinity Capital	1	1	5	0	2.57

Barings Bdc presently has a consensus target price of $9.67, indicating a potential upside of 7.95%. Trinity Capital has a consensus target price of $16.44, indicating a potential upside of 8.14%. Given Trinity Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Trinity Capital is more favorable than Barings Bdc.

Dividends

Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 11.6%. Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 13.4%. Barings Bdc pays out 107.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Trinity Capital pays out 93.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has raised its dividend for 3 consecutive years and Trinity Capital has raised its dividend for 1 consecutive years. Trinity Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Institutional and Insider Ownership

44.1% of Barings Bdc shares are owned by institutional investors. Comparatively, 24.6% of Trinity Capital shares are owned by institutional investors. 0.5% of Barings Bdc shares are owned by insiders. Comparatively, 5.3% of Trinity Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Barings Bdc and Trinity Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Barings Bdc	36.01%	10.11%	4.30%
Trinity Capital	50.49%	15.51%	7.00%

Earnings & Valuation

This table compares Barings Bdc and Trinity Capital”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Barings Bdc	$114.20 million	8.25	$110.29 million	$0.97	9.23
Trinity Capital	$208.78 million	5.51	$115.60 million	$2.19	6.94

Trinity Capital has higher revenue and earnings than Barings Bdc. Trinity Capital is trading at a lower price-to-earnings ratio than Barings Bdc, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Barings Bdc has a beta of 0.62, indicating that its share price is 38% less volatile than the S&P 500. Comparatively, Trinity Capital has a beta of 0.53, indicating that its share price is 47% less volatile than the S&P 500.

Summary

Trinity Capital beats Barings Bdc on 12 of the 17 factors compared between the two stocks.

About Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.

About Trinity Capital

Trinity Capital Inc. is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.