Reviewing Trinity Capital (NASDAQ:TRIN) and Chicago Atlantic BDC (NASDAQ:LIEN)

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

Insider & Institutional Ownership

24.6% of Trinity Capital shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 5.3% of Trinity Capital shares are held by insiders. Comparatively, 16.9% of Chicago Atlantic BDC shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Profitability

This table compares Trinity Capital and Chicago Atlantic BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trinity Capital	46.18%	14.97%	6.68%
Chicago Atlantic BDC	33.72%	5.80%	5.46%

Dividends

Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 13.7%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 13.5%. Trinity Capital pays out 104.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chicago Atlantic BDC pays out 172.2% 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 has increased its dividend for 1 consecutive years. Trinity Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent ratings for Trinity Capital and Chicago Atlantic BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trinity Capital	1	1	5	1	2.75
Chicago Atlantic BDC	0	3	0	0	2.00

Trinity Capital currently has a consensus target price of $16.29, suggesting a potential upside of 9.23%. Given Trinity Capital’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Trinity Capital is more favorable than Chicago Atlantic BDC.

Risk and Volatility

Trinity Capital has a beta of 0.55, suggesting that its stock price is 45% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.27, suggesting that its stock price is 73% less volatile than the S&P 500.

Earnings & Valuation

This table compares Trinity Capital and Chicago Atlantic BDC”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trinity Capital	$293.65 million	4.22	$135.60 million	$1.96	7.61
Chicago Atlantic BDC	$21.67 million	10.57	$9.62 million	$0.79	12.71

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

Summary

Trinity Capital beats Chicago Atlantic BDC on 15 of the 18 factors compared between the two stocks.

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.

About Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.