This article focuses on the eight BDCs reporting financial results next week with my latest rankings as well as expected earnings for the quarter ended March 2013.
These are the five general criteria I use to evaluate BDCs:
- Profitability (EPS to cover dividends, NAV and EPS growth)
Risk (diversification, portfolio quality, volatility, leverage)
Payout (sustainable, consistent, growing)
Valuation (NAV, P/E, PEG)
Below is an oversimplified table with rankings between 0 and 10 (10 being the best) relative to the 25 BDCs I have reviewed. In reality, I use different weightings for almost 100 data points on each company and my personal rankings (based on my risk/return comfort) are close to these, but far from exact.
Medley Capital (NYSE:MCC) is a BDC that I reviewed early on in a series called "The Good, The Bad, and The Maybe?" and currently remains one of the top ranked. Financial results are expected after the market closes on or around May 2, with projected EPS of $0.36, and is expected to cover its quarterly $0.36 dividend.
Fidus Investment (NASDAQ:FDUS) will report May 2, after the close of the markets with projected EPS of $0.40 adequately covering its quarterly dividend of $0.38. In my most recent article, I ranked FDUS as one of "The Good" BDCs.
BlackRock Kelso Capital (NASDAQ:BKCC) will report May 2, prior to the opening of the markets, with projected EPS of $0.27 adequately covering its quarterly dividend of $0.26. In my most recent article, I compare BKCC to Fifth Street Finance (NASDAQ:FSC) and rank it at the low end of "The Maybe" BDCs.
Hercules Technology Growth Capital (NYSE:HTGC) will release financial results after market close on May 2 with projected EPS of $0.25, and is expected to cover its quarterly $0.25 dividend. I consider HTGC one of "The Bad" BDCs, as discussed in this article.
Gladstone Capital (NASDAQ:GLAD) will report after the market closes on April 30 with projected EPS $0.20 just below covering its monthly dividend of $0.07. GLAD is currently ranked near the low end of my "Maybe" category for reasons discussed in this article.
MCG Capital (NASDAQ:MCGC) is another BDC I reviewed early in the last series and will report first quarter financial results on April 30 with expected EPS of $0.11, insufficiently covering its quarterly dividend of $0.125. This BDC has reduced dividends twice in the last 12 months, making it one of "The Bad" BDCs.
For more information about BDCs and how I evaluate them, please see this article.