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This article focuses on the seven BDCs reporting financial results early 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)
  • Analyst Opinions
  • 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.

(click to enlarge)

THL Credit (TCRD) is one of 'The Good' BDCs that has grown its portfolio in a fiscally prudent manner with a low amount of leverage, as discussed in this article. It reports results after the market's close on May 6, with projected EPS of $0.33, adequately covering its current dividend.

Solar Capital (SLRC) is a BDC that I reviewed early on in a series called "The Good, The Bad, and The Maybe?" and will release results on May 7, after the close of the markets, with projected EPS of $0.58, just short of its $0.60 dividend, making it one of 'The Maybe' BDCs, as discussed in this article.

Prospect Capital (PSEC) is one of 'The Good' BDCs, but this will be an important release on May 6, showing the stabilized projected EPS of $0.30. After the previous quarters that included a temporary bump from its Gas Solutions sale taken as income rather than capital gains, as well as continued equity and debt offerings, it is difficult to project earnings, as discussed in "Prospect Capital: Is It Better Than American Capital".

Ares Capital (ARCC) will report on May 7, with projected EPS of $0.40 covering its $0.38 dividend and depending on results, it could be considered a 'Good' BDC, as discussed in this article.

New Mountain Finance (NMFC) will release results on May 6, after the close of the markets, with projected EPS $0.35 covering its $0.34 dividend. It considered a 'Maybe' as discussed in this article.

Horizon Technology Finance (HRZN) is one of the higher dividend yielding BDCs as discussed in "Highest-Yield BDCs With The Lowest Multiples" and will report on May 7, after the close of the markets.

Solar Senior Capital (SUNS) will release results on May 7, after the close of the markets, with projected EPS of $0.28, short of covering its $0.35 dividends. It is considered a 'Maybe' until yield increases and multiples come down as discussed in this article.

For more information about BDCs and how I evaluate them, please see this article.

Source: Earnings Preview For BDCs: Q1 2013, Part 2