OFS Capital (NASDAQ:OFS – Get Free Report) and Investcorp Credit Management BDC (NASDAQ:ICMB – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, profitability, valuation, institutional ownership, risk, earnings and analyst recommendations.
Valuation and Earnings
This table compares OFS Capital and Investcorp Credit Management BDC”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| OFS Capital | $40.69 million | 1.19 | -$33.09 million | ($2.11) | -1.71 |
| Investcorp Credit Management BDC | $17.40 million | 0.55 | -$8.85 million | ($1.42) | -0.47 |
Investcorp Credit Management BDC has lower revenue, but higher earnings than OFS Capital. OFS Capital is trading at a lower price-to-earnings ratio than Investcorp Credit Management BDC, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
OFS Capital has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, Investcorp Credit Management BDC has a beta of 0.68, suggesting that its share price is 32% less volatile than the S&P 500.
Profitability
This table compares OFS Capital and Investcorp Credit Management BDC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| OFS Capital | -62.24% | 7.46% | 2.67% |
| Investcorp Credit Management BDC | -134.21% | 0.86% | 0.28% |
Insider & Institutional Ownership
10.8% of OFS Capital shares are held by institutional investors. Comparatively, 7.8% of Investcorp Credit Management BDC shares are held by institutional investors. 0.5% of OFS Capital shares are held by company insiders. Comparatively, 1.3% of Investcorp Credit Management BDC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.
Analyst Recommendations
This is a summary of recent ratings and recommmendations for OFS Capital and Investcorp Credit Management BDC, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| OFS Capital | 1 | 2 | 0 | 0 | 1.67 |
| Investcorp Credit Management BDC | 1 | 0 | 0 | 0 | 1.00 |
OFS Capital currently has a consensus target price of $7.00, suggesting a potential upside of 94.44%. Given OFS Capital’s stronger consensus rating and higher probable upside, research analysts plainly believe OFS Capital is more favorable than Investcorp Credit Management BDC.
Summary
OFS Capital beats Investcorp Credit Management BDC on 9 of the 13 factors compared between the two stocks.
About OFS Capital
OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, ownership transition, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, construction & building, durable goods, capital equipment, automotive, food and beverage, healthcare & pharmaceutical, specialty chemicals, transportation cargo and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $3 million and $35 million, revenues between $15 million and $300 million, annual EBITDA between $5 million and $50 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.
About Investcorp Credit Management BDC
Investcorp Credit Management BDC, Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, acquisitions, market/product expansion, organic growth, refinancings and recapitalization investments. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments, in most cases taking such upside participation interests as part of a broader investment relationship. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest between $5 million to $25 million in companies that have annual revenues of at least $50 million with EBITDA at least $15 million.
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