Saratoga Investment (NYSE:SAR) versus TriplePoint Venture Growth BDC (NYSE:TPVG) Critical Survey

TriplePoint Venture Growth BDC (NYSE:TPVG) and Saratoga Investment (NYSE:SAR) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, profitability, risk, dividends, earnings and valuation.

Profitability

This table compares TriplePoint Venture Growth BDC and Saratoga Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
TriplePoint Venture Growth BDC	54.12%	12.04%	5.29%
Saratoga Investment	30.61%	9.19%	3.09%

Volatility & Risk

TriplePoint Venture Growth BDC has a beta of 1.32, indicating that its share price is 32% more volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.54, indicating that its share price is 46% less volatile than the S&P 500.

Dividends

TriplePoint Venture Growth BDC pays an annual dividend of $0.92 per share and has a dividend yield of 18.1%. Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.6%. TriplePoint Venture Growth BDC pays out 74.8% of its earnings in the form of a dividend. 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. TriplePoint Venture Growth BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings & Valuation

This table compares TriplePoint Venture Growth BDC and Saratoga Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
TriplePoint Venture Growth BDC	$90.93 million	2.26	$49.21 million	$1.23	4.13
Saratoga Investment	$148.85 million	2.40	$28.09 million	$2.44	9.02

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

Institutional & Insider Ownership

12.8% of TriplePoint Venture Growth BDC shares are held by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are held by institutional investors. 1.6% of TriplePoint Venture Growth BDC shares are held by insiders. Comparatively, 10.0% of Saratoga Investment shares are held by 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 target prices for TriplePoint Venture Growth BDC and Saratoga Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
TriplePoint Venture Growth BDC	2	4	0	0	1.67
Saratoga Investment	0	6	0	0	2.00

TriplePoint Venture Growth BDC presently has a consensus target price of $5.75, suggesting a potential upside of 13.08%. Saratoga Investment has a consensus target price of $23.63, suggesting a potential upside of 7.39%. Given TriplePoint Venture Growth BDC’s higher probable upside, analysts plainly believe TriplePoint Venture Growth BDC is more favorable than Saratoga Investment.

Summary

TriplePoint Venture Growth BDC beats Saratoga Investment on 8 of the 15 factors compared between the two stocks.

About TriplePoint Venture Growth BDC

TriplePoint Venture Growth BDC Corp. is a business development company specializing investments in venture capital-backed companies at the growth stage investments. It also provides debt financing to venture growth space companies which includes growth capital loans, secured and customized loans, equipment financings, revolving loans and direct equity investments. The fund seeks to invest in e-commerce, entertainment, technology and life sciences sector. Within technology the areas of focus include: Security, wireless communication equipments, network system and software, business applications software, conferencing equipments/services .big data, cloud computing, data storage, electronics, energy efficiency, hardware, information services, internet and media, networking, semiconductors, software, software as a service, and other technology related subsectors and within life sciences the areas of focus include: biotechnology, bio fuels/bio mass, diagnostic testing and bioinformatics, drug delivery, drug discovery, healthcare information systems, healthcare services, medical, surgical and therapeutic devices, pharmaceuticals and other life science related subsectors. Within growth capital loans it invests between $5 million and $50 million, for equipment financings it invests between $5 million and $25 million, for revolving loans it invests between $1 million and $25 million, and for direct equity investments it may invest between $0.1 million and $5 million (generally not exceeding 5% of the company’s total equity). The debt financing products are typically structured as lines of credit and it invests through warrants and secured loans. It targeted returns between 10% and 18%. It does not take board seat in the company.

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.