Head to Head Comparison: Saratoga Investment (NYSE:SAR) vs. Crescent Capital BDC (NASDAQ:CCAP)

Saratoga Investment (NYSE:SAR) and Crescent Capital BDC (NASDAQ:CCAP) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, valuation, earnings, institutional ownership and profitability.

Profitability

This table compares Saratoga Investment and Crescent Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saratoga Investment	30.61%	9.19%	3.09%
Crescent Capital BDC	20.84%	9.76%	4.30%

Dividends

Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.1%. Crescent Capital BDC pays an annual dividend of $1.68 per share and has a dividend yield of 13.0%. Saratoga Investment pays out 123.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Crescent Capital BDC pays out 171.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Crescent Capital BDC has increased its dividend for 1 consecutive years. Saratoga Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility & Risk

Saratoga Investment has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Crescent Capital BDC has a beta of 0.55, indicating that its share price is 45% less volatile than the S&P 500.

Institutional & Insider Ownership

19.1% of Saratoga Investment shares are owned by institutional investors. Comparatively, 49.5% of Crescent Capital BDC shares are owned by institutional investors. 10.0% of Saratoga Investment shares are owned by company insiders. Comparatively, 1.1% of Crescent Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of recent ratings for Saratoga Investment and Crescent Capital BDC, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saratoga Investment	0	6	0	0	2.00
Crescent Capital BDC	0	2	3	1	2.83

Saratoga Investment currently has a consensus price target of $23.63, indicating a potential upside of 3.25%. Crescent Capital BDC has a consensus price target of $16.38, indicating a potential upside of 26.35%. Given Crescent Capital BDC’s stronger consensus rating and higher possible upside, analysts clearly believe Crescent Capital BDC is more favorable than Saratoga Investment.

Valuation & Earnings

This table compares Saratoga Investment and Crescent Capital BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saratoga Investment	$148.85 million	2.49	$28.09 million	$2.44	9.38
Crescent Capital BDC	$197.36 million	2.43	$73.65 million	$0.98	13.22

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

Summary

Crescent Capital BDC beats Saratoga Investment on 11 of the 18 factors compared between the two stocks.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.

About Crescent Capital BDC

Crescent Capital BDC, Inc. is as a business development company private equity / buyouts and loan fund. It specializes in directly investing. It specializes in middle market. The fund seeks to invest in United States.