MidCap Financial Investment (NASDAQ:MFIC – Get Rating) and Templeton Dragon Fund (NYSE:TDF – Get Rating) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, valuation, institutional ownership, risk, dividends, earnings and analyst recommendations.
Analyst Ratings
This is a summary of current ratings and recommmendations for MidCap Financial Investment and Templeton Dragon Fund, as reported by MarketBeat.
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MidCap Financial Investment alerts:
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score |
| MidCap Financial Investment | 0 | 2 | 1 | 0 | 2.33 |
| Templeton Dragon Fund | 0 | 0 | 0 | 0 | N/A |
MidCap Financial Investment presently has a consensus price target of $12.17, indicating a potential upside of 0.55%. Given MidCap Financial Investment's higher possible upside, analysts clearly believe MidCap Financial Investment is more favorable than Templeton Dragon Fund.
Dividends
MidCap Financial Investment pays an annual dividend of $1.28 per share and has a dividend yield of 10.6%. Templeton Dragon Fund pays an annual dividend of $1.30 per share and has a dividend yield of 12.4%. MidCap Financial Investment pays out 175.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MidCap Financial Investment has raised its dividend for 1 consecutive years.
Insider & Institutional Ownership
28.6% of MidCap Financial Investment shares are held by institutional investors. 0.9% of MidCap Financial Investment shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.
Volatility and Risk
MidCap Financial Investment has a beta of 1.6, indicating that its share price is 60% more volatile than the S&P 500. Comparatively, Templeton Dragon Fund has a beta of 0.48, indicating that its share price is 52% less volatile than the S&P 500.
Valuation and Earnings
This table compares MidCap Financial Investment and Templeton Dragon Fund's revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio |
| MidCap Financial Investment | $213.15 million | 3.72 | $82.36 million | $0.73 | 16.58 |
| Templeton Dragon Fund | N/A | N/A | N/A | N/A | N/A |
MidCap Financial Investment has higher revenue and earnings than Templeton Dragon Fund.
Profitability
This table compares MidCap Financial Investment and Templeton Dragon Fund's net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets |
| MidCap Financial Investment | 20.92% | 9.54% | 3.67% |
| Templeton Dragon Fund | N/A | N/A | N/A |
Summary
MidCap Financial Investment beats Templeton Dragon Fund on 10 of the 12 factors compared between the two stocks.
About MidCap Financial Investment
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Apollo Investment Corporation is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy – oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media – diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies. The fund seeks to make investments with stated maturities of five to 10 years.
About Templeton Dragon Fund
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Templeton Dragon Fund, Inc. is a closed ended equity mutual fund launched by Franklin Resources, Inc. The fund is managed by Templeton Asset Management Ltd. It invests in the public equity markets of China. The fund seeks to invest in stocks of companies operating across diversified sectors. It primarily invests in value stocks of companies. The fund employs fundamental analysis focusing on factors like growth prospects, competitive positions in export markets, technologies, research and development, productivity, labor costs, raw material costs and sources, profit margins, returns on investment, capital resources, government regulation, and management to create its portfolio. It is actively managed. Templeton Dragon Fund, Inc. was formed on September 20, 1994 and is domiciled in the United States.
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