Main Street Capital (NYSE:MAIN – Get Free Report) and MSC Income Fund (NYSE:MSIF – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their dividends, institutional ownership, valuation, earnings, analyst recommendations, profitability and risk.
Institutional & Insider Ownership
20.3% of Main Street Capital shares are held by institutional investors. 3.8% of Main Street Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
Profitability
This table compares Main Street Capital and MSC Income Fund’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Main Street Capital | 78.49% | 11.80% | 6.32% |
| MSC Income Fund | N/A | N/A | N/A |
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Main Street Capital | $566.39 million | 9.14 | $493.40 million | $4.96 | 11.16 |
| MSC Income Fund | $110.26 million | 5.09 | -$155,544.55 | ($0.00) | -3,608.67 |
Main Street Capital has higher revenue and earnings than MSC Income Fund. MSC Income Fund is trading at a lower price-to-earnings ratio than Main Street Capital, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent ratings for Main Street Capital and MSC Income Fund, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Main Street Capital | 0 | 5 | 5 | 0 | 2.50 |
| MSC Income Fund | 0 | 3 | 2 | 1 | 2.67 |
Main Street Capital currently has a consensus target price of $61.67, indicating a potential upside of 11.44%. MSC Income Fund has a consensus target price of $13.88, indicating a potential upside of 16.55%. Given MSC Income Fund’s stronger consensus rating and higher possible upside, analysts clearly believe MSC Income Fund is more favorable than Main Street Capital.
Summary
Main Street Capital beats MSC Income Fund on 11 of the 14 factors compared between the two stocks.
About Main Street Capital
Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.
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