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MCG Capital: An Overpriced BDC

This article compares MCG Capital (NASDAQ:MCGC) to the 24 other BDCs covered in my previous articles assessing profitability, risk profile and dividend sustainability to determine the appropriate valuation relative to other BDCs. MCGC has a history of declining revenues, earnings, dividends and net asset values, along with one of the highest risk profiles in the industry due to its riskier investment mix, declining portfolio credit quality and historically high leverage and volatility ratios. Due to its high-risk profile and poor financial performance, I have included MCGC in the lower ranges of valuation multiples relative to other BDCs. However, it currently has the highest P/E ratio in the industry at 16.5 times last 12 months EPS.

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