Bain Capital Specialty Finance (NYSE:BCSF) versus Rand Capital (NASDAQ:RAND) Head to Head Contrast

Rand Capital (NASDAQ:RAND) and Bain Capital Specialty Finance (NYSE:BCSF) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, risk, profitability and earnings.

Profitability

This table compares Rand Capital and Bain Capital Specialty Finance’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Rand Capital	-124.17%	6.55%	6.40%
Bain Capital Specialty Finance	36.14%	10.74%	4.51%

Valuation & Earnings

This table compares Rand Capital and Bain Capital Specialty Finance”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Rand Capital	-$12.06 million	-3.02	-$8.04 million	($2.69)	-4.56
Bain Capital Specialty Finance	$273.24 million	2.97	$98.76 million	$1.53	8.17

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

Volatility & Risk

Rand Capital has a beta of 0.19, suggesting that its stock price is 81% less volatile than the S&P 500. Comparatively, Bain Capital Specialty Finance has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500.

Analyst Ratings

This is a summary of current ratings for Rand Capital and Bain Capital Specialty Finance, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Rand Capital	1	0	0	0	1.00
Bain Capital Specialty Finance	0	2	1	0	2.33

Bain Capital Specialty Finance has a consensus price target of $14.00, indicating a potential upside of 12.00%. Given Bain Capital Specialty Finance’s stronger consensus rating and higher possible upside, analysts plainly believe Bain Capital Specialty Finance is more favorable than Rand Capital.

Dividends

Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 9.5%. Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 13.4%. Rand Capital pays out -43.1% of its earnings in the form of a dividend. Bain Capital Specialty Finance pays out 109.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Bain Capital Specialty Finance has increased its dividend for 4 consecutive years. Bain Capital Specialty Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Bain Capital Specialty Finance beats Rand Capital on 13 of the 15 factors compared between the two stocks.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.