Financial Analysis: TriplePoint Venture Growth BDC (NYSE:TPVG) and MidCap Financial Investment (NASDAQ:MFIC)

MidCap Financial Investment (NASDAQ:MFIC) and TriplePoint Venture Growth BDC (NYSE:TPVG) 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.

Analyst Ratings

This is a breakdown of current recommendations and price targets for MidCap Financial Investment and TriplePoint Venture Growth BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	1	6	2	0	2.11
TriplePoint Venture Growth BDC	2	4	0	0	1.67

MidCap Financial Investment currently has a consensus target price of $11.11, indicating a potential upside of 15.46%. TriplePoint Venture Growth BDC has a consensus target price of $5.25, indicating a potential upside of 0.38%. Given MidCap Financial Investment’s stronger consensus rating and higher possible upside, research analysts clearly believe MidCap Financial Investment is more favorable than TriplePoint Venture Growth BDC.

Insider & Institutional Ownership

28.4% of MidCap Financial Investment shares are held by institutional investors. Comparatively, 12.8% of TriplePoint Venture Growth BDC shares are held by institutional investors. 0.9% of MidCap Financial Investment shares are held by company insiders. Comparatively, 1.5% of TriplePoint Venture Growth 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.

Volatility and Risk

MidCap Financial Investment has a beta of 0.61, meaning that its share price is 39% less volatile than the S&P 500. Comparatively, TriplePoint Venture Growth BDC has a beta of 1.31, meaning that its share price is 31% more volatile than the S&P 500.

Profitability

This table compares MidCap Financial Investment and TriplePoint Venture Growth BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	-9.85%	11.17%	4.41%
TriplePoint Venture Growth BDC	44.58%	10.68%	4.58%

Dividends

MidCap Financial Investment pays an annual dividend of $1.24 per share and has a dividend yield of 12.9%. TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 17.6%. MidCap Financial Investment pays out -344.4% of its earnings in the form of a dividend. TriplePoint Venture Growth BDC pays out 92.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares MidCap Financial Investment and TriplePoint Venture Growth BDC”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$320.88 million	2.47	$63.17 million	($0.36)	-26.72
TriplePoint Venture Growth BDC	$90.93 million	2.34	$49.21 million	$0.99	5.28

MidCap Financial Investment has higher revenue and earnings than TriplePoint Venture Growth BDC. MidCap Financial Investment is trading at a lower price-to-earnings ratio than TriplePoint Venture Growth BDC, indicating that it is currently the more affordable of the two stocks.

Summary

MidCap Financial Investment beats TriplePoint Venture Growth BDC on 9 of the 16 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.