Contrasting Rand Capital (NASDAQ:RAND) & Bain Capital Specialty Finance (NYSE:BCSF)

Bain Capital Specialty Finance (NYSE:BCSF) and Rand Capital (NASDAQ:RAND) are both small-cap finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, institutional ownership, dividends, risk, earnings, profitability and valuation.

Dividends

Bain Capital Specialty Finance pays an annual dividend of $1.68 per share and has a dividend yield of 13.4%. Rand Capital pays an annual dividend of $1.16 per share and has a dividend yield of 9.5%. Bain Capital Specialty Finance pays out 109.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Rand Capital pays out -43.1% of its earnings in the form of a dividend. Bain Capital Specialty Finance has raised its dividend for 4 consecutive years. Bain Capital Specialty Finance is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares Bain Capital Specialty Finance and Rand Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Bain Capital Specialty Finance	36.14%	10.74%	4.51%
Rand Capital	-124.17%	6.55%	6.40%

Valuation and Earnings

This table compares Bain Capital Specialty Finance and Rand Capital”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Bain Capital Specialty Finance	$273.24 million	2.97	$98.76 million	$1.53	8.17
Rand Capital	-$12.06 million	-3.02	-$8.04 million	($2.69)	-4.56

Bain Capital Specialty Finance has higher revenue and earnings than Rand Capital. Rand Capital is trading at a lower price-to-earnings ratio than Bain Capital Specialty Finance, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Bain Capital Specialty Finance has a beta of 0.6, indicating that its share price is 40% less volatile than the S&P 500. Comparatively, Rand Capital has a beta of 0.19, indicating that its share price is 81% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings and price targets for Bain Capital Specialty Finance and Rand Capital, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Bain Capital Specialty Finance	0	2	1	0	2.33
Rand Capital	1	0	0	0	1.00

Bain Capital Specialty Finance currently has a consensus target price of $14.00, suggesting a potential upside of 12.00%. Given Bain Capital Specialty Finance’s stronger consensus rating and higher possible upside, research analysts clearly believe Bain Capital Specialty Finance is more favorable than Rand Capital.

Summary

Bain Capital Specialty Finance beats Rand Capital on 13 of the 15 factors compared between the two stocks.

About Bain Capital Specialty Finance

Bain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.

About Rand Capital

Rand Capital Corporation is a business development company specializing in subordinated debt with warrants or preferred equity and venture capital investments. Within private equity, the firm specializing in capital growth and lower middle market investments. Within venture capital, it specializing in early to late-stage private businesses. It does not prefer to invest in real estate sector. It prefers to invest in software, professional services, manufacturing, consumer, healthcare, automotive and public d stocks. It prefers to invest in East or Midwest U.S. operations sectors. It typically invests between $0.75 million and $5 million with initial target size of $1.5 million. It seeks to invest in companies having more than $2 million in revenue or having excess of $1.5 million and up to $5 million in EBITDA. It prefers to be a minority stake and seeks to take a Board seat in its portfolio companies. It typically holds its investments for a period up to five years.