Eagle Point Credit (NYSE:ECC) vs. Bain Capital Specialty Finance (NYSE:BCSF) Head to Head Review

Bain Capital Specialty Finance (NYSE:BCSF) and Eagle Point Credit (NYSE:ECC) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their valuation, analyst recommendations, earnings, institutional ownership, profitability, risk and dividends.

Risk and Volatility

Bain Capital Specialty Finance has a beta of 0.6, meaning that its share price is 40% less volatile than the S&P 500. Comparatively, Eagle Point Credit has a beta of 0.38, meaning that its share price is 62% less volatile than the S&P 500.

Institutional & Insider Ownership

19.5% of Eagle Point Credit shares are owned by institutional investors. 0.6% of Bain Capital Specialty Finance shares are owned by company insiders. Comparatively, 0.3% of Eagle Point Credit shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 15.5%. Eagle Point Credit pays an annual dividend of $1.26 per share and has a dividend yield of 38.4%. Bain Capital Specialty Finance pays out 169.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Eagle Point Credit pays out 206.6% 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Bain Capital Specialty Finance	24.22%	10.40%	4.33%
Eagle Point Credit	-84.29%	-1.83%	-0.99%

Valuation and Earnings

This table compares Bain Capital Specialty Finance and Eagle Point Credit”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bain Capital Specialty Finance	$78.39 million	8.97	$98.76 million	$0.99	10.95
Eagle Point Credit	-$158.23 million	-2.74	-$115.00 million	$0.61	5.39

Bain Capital Specialty Finance has higher revenue and earnings than Eagle Point Credit. Eagle Point Credit 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.

Analyst Ratings

This is a breakdown of recent ratings and price targets for Bain Capital Specialty Finance and Eagle Point Credit, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bain Capital Specialty Finance	1	3	0	0	1.75
Eagle Point Credit	0	2	2	0	2.50

Bain Capital Specialty Finance presently has a consensus target price of $12.60, indicating a potential upside of 16.18%. Eagle Point Credit has a consensus target price of $4.62, indicating a potential upside of 40.79%. Given Eagle Point Credit’s stronger consensus rating and higher possible upside, analysts plainly believe Eagle Point Credit is more favorable than Bain Capital Specialty Finance.

Summary

Bain Capital Specialty Finance beats Eagle Point Credit on 12 of the 17 factors compared between the two stocks.

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.

About Eagle Point Credit

Eagle Point Credit Company Inc. is a closed ended fund launched and managed by Eagle Point Credit Management LLC. It invests in fixed income markets of the United States. The fund invests equity and junior debt tranches of collateralized loan obligations consisting primarily of below investment grade U.S. senior secured loans. Eagle Point Credit Company Inc. was formed on March 24, 2014 and is domiciled in the United States.