Reviewing AFC Gamma (NASDAQ:AFCG) & Blackrock Tcp Capital (NASDAQ:TCPC)

Blackrock Tcp Capital (NASDAQ:TCPC) and AFC Gamma (NASDAQ:AFCG) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their analyst recommendations, risk, profitability, valuation, dividends, institutional ownership and earnings.

Insider and Institutional Ownership

26.5% of AFC Gamma shares are held by institutional investors. 0.4% of Blackrock Tcp Capital shares are held by company insiders. Comparatively, 30.7% of AFC Gamma shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.

Dividends

Blackrock Tcp Capital pays an annual dividend of $0.68 per share and has a dividend yield of 17.0%. AFC Gamma pays an annual dividend of $0.20 per share and has a dividend yield of 6.3%. Blackrock Tcp Capital pays out -53.1% of its earnings in the form of a dividend. AFC Gamma pays out 105.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blackrock Tcp Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Blackrock Tcp Capital and AFC Gamma, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Blackrock Tcp Capital	1	3	0	0	1.75
AFC Gamma	1	1	0	0	1.50

Blackrock Tcp Capital currently has a consensus target price of $4.00, indicating a potential upside of 0.13%. Given Blackrock Tcp Capital’s stronger consensus rating and higher possible upside, equities research analysts clearly believe Blackrock Tcp Capital is more favorable than AFC Gamma.

Profitability

This table compares Blackrock Tcp Capital and AFC Gamma’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Blackrock Tcp Capital	-61.27%	13.85%	5.28%
AFC Gamma	15.64%	2.85%	1.50%

Valuation and Earnings

This table compares Blackrock Tcp Capital and AFC Gamma”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Blackrock Tcp Capital	$201.79 million	1.66	-$88.93 million	($1.28)	-3.12
AFC Gamma	$31.32 million	2.29	-$20.67 million	$0.19	16.66

AFC Gamma has lower revenue, but higher earnings than Blackrock Tcp Capital. Blackrock Tcp Capital is trading at a lower price-to-earnings ratio than AFC Gamma, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

Blackrock Tcp Capital has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500. Comparatively, AFC Gamma has a beta of 0.99, meaning that its share price is 1% less volatile than the S&P 500.

About Blackrock Tcp Capital

BlackRock TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, small businesses, debt securities, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It typically invests in communication services, public relations services, television, wireless telecommunication services, apparel, textile mills, restaurants, retailing, energy, oil and gas extraction, Patent owners and Lessors, Federal and Federally- Sponsored Credit agencies, insurance, hospital and healthcare centers, Biotechnology, engineering services, heavy electrical equipment, tax accounting, scientific and related consulting services, charter freight air transportation, Information technology consulting, application hosting services, software diagram and design, computer aided design, communication equipment, electronics manufacturing equipment, computer components, chemicals. It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million including complex situations. It prefers to make equity investments in companies for an ownership stake.

About AFC Gamma

AFC Gamma, Inc. originates, structures, underwrites, and invests in senior secured loans, and other various commercial real estate loans and debt securities for established companies operating in the cannabis industry. It primarily originates loans structured as senior loans secured by real estate, equipment, and licenses and/or other assets of the loan parties to the extent permitted by applicable laws and the regulations governing such loan parties. The company has elected and qualified to be taxed as a real estate investment trust for the United States federal income tax purposes under the Internal Revenue Code of 1986. AFC Gamma, Inc. was incorporated in 2020 and is based in West Palm Beach, Florida.