Crescent Capital BDC (NASDAQ:CCAP) and OFS Capital (NASDAQ:OFS) Financial Analysis

OFS Capital (NASDAQ:OFS) and Crescent Capital BDC (NASDAQ:CCAP) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, valuation, risk, earnings, analyst recommendations, dividends and institutional ownership.

Earnings & Valuation

This table compares OFS Capital and Crescent Capital BDC”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
OFS Capital	$40.69 million	1.05	-$33.09 million	($2.47)	-1.29
Crescent Capital BDC	$167.29 million	2.78	$34.51 million	$0.94	13.41

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

Volatility and Risk

OFS Capital has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Crescent Capital BDC has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500.

Dividends

OFS Capital pays an annual dividend of $0.68 per share and has a dividend yield of 21.3%. Crescent Capital BDC pays an annual dividend of $1.68 per share and has a dividend yield of 13.3%. OFS Capital pays out -27.5% of its earnings in the form of a dividend. Crescent Capital BDC pays out 178.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. OFS Capital has raised its dividend for 3 consecutive years and Crescent Capital BDC has raised its dividend for 1 consecutive years. OFS Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares OFS Capital and Crescent Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
OFS Capital	-81.33%	8.75%	3.23%
Crescent Capital BDC	20.64%	9.32%	4.07%

Insider & Institutional Ownership

10.8% of OFS Capital shares are held by institutional investors. Comparatively, 49.5% of Crescent Capital BDC shares are held by institutional investors. 0.5% of OFS Capital shares are held by company insiders. Comparatively, 1.1% of Crescent Capital BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations and price targets for OFS Capital and Crescent Capital BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
OFS Capital	1	1	0	0	1.50
Crescent Capital BDC	0	2	3	1	2.83

OFS Capital currently has a consensus target price of $7.00, indicating a potential upside of 119.44%. Crescent Capital BDC has a consensus target price of $16.13, indicating a potential upside of 27.87%. Given OFS Capital’s higher possible upside, research analysts clearly believe OFS Capital is more favorable than Crescent Capital BDC.

Summary

Crescent Capital BDC beats OFS Capital on 13 of the 18 factors compared between the two stocks.

About OFS Capital

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.

About Crescent Capital BDC

Crescent Capital BDC, Inc. is as a business development company private equity / buyouts and loan fund. It specializes in directly investing. It specializes in middle market. The fund seeks to invest in United States.