Reviewing BlackRock TCP Capital (NASDAQ:TCPC) and Mercury General (NYSE:MCY)

Mercury General (NYSE:MCY) and BlackRock TCP Capital (NASDAQ:TCPC) are both finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, profitability, analyst recommendations, institutional ownership and valuation.

Profitability

This table compares Mercury General and BlackRock TCP Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Mercury General	4.48%	9.85%	2.05%
BlackRock TCP Capital	9.69%	13.95%	5.81%

Analyst Ratings

This is a breakdown of current recommendations and price targets for Mercury General and BlackRock TCP Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Mercury General	0	0	1	0	3.00
BlackRock TCP Capital	0	5	0	0	2.00

Mercury General currently has a consensus price target of $33.00, suggesting a potential downside of 39.67%. BlackRock TCP Capital has a consensus price target of $11.00, suggesting a potential upside of 7.00%. Given BlackRock TCP Capital’s higher possible upside, analysts plainly believe BlackRock TCP Capital is more favorable than Mercury General.

Valuation and Earnings

This table compares Mercury General and BlackRock TCP Capital’s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury General	$4.80 billion	0.63	$96.34 million	$3.89	14.06
BlackRock TCP Capital	$209.33 million	2.84	$38.47 million	$0.35	29.37

Mercury General has higher revenue and earnings than BlackRock TCP Capital. Mercury General is trading at a lower price-to-earnings ratio than BlackRock TCP Capital, indicating that it is currently the more affordable of the two stocks.

Insider & Institutional Ownership

42.4% of Mercury General shares are held by institutional investors. 35.5% of Mercury General shares are held by insiders. Comparatively, 0.2% of BlackRock TCP Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Mercury General has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, BlackRock TCP Capital has a beta of 1.42, meaning that its share price is 42% more volatile than the S&P 500.

Dividends

Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 2.3%. BlackRock TCP Capital pays an annual dividend of $1.36 per share and has a dividend yield of 13.2%. Mercury General pays out 32.6% of its earnings in the form of a dividend. BlackRock TCP Capital pays out 388.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BlackRock TCP Capital has raised its dividend for 2 consecutive years. BlackRock TCP Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

BlackRock TCP Capital beats Mercury General on 9 of the 17 factors compared between the two stocks.

About Mercury General

Mercury General Corporation, together with its subsidiaries, engages in writing personal automobile insurance in the United States. The company also writes homeowners, commercial automobile, commercial property, mechanical protection, and umbrella insurance products. Its automobile insurance products include collision, property damage, bodily injury, comprehensive, personal injury protection, underinsured and uninsured motorist, and other hazards; and homeowners insurance products comprise dwelling, liability, personal property, and other coverages. The company sells its policies through a network of independent agents, insurance agencies, as well as directly through internet sales portals in Arizona, California, Florida, Georgia, Illinois, Nevada, New Jersey, New York, Oklahoma, Texas, and Virginia. Mercury General Corporation was founded in 1961 and is headquartered in Los Angeles, California.

About BlackRock TCP Capital

BlackRock TCP Capital Corp. is a business development company specializing in direct equity and debt investments in middle-market, small businesses, debt securities, senior secured loans, junior loans, originated loans, mezzanine, senior debt instruments, bonds, and secondary-market investments. It typically invests in communication services, public relations services, television, wireless telecommunication services, apparel, textile mills, restaurants, retailing, energy, oil and gas extraction, Patent owners and Lessors, Federal and Federally- Sponsored Credit agencies, insurance, hospital and healthcare centers, Biotechnology, engineering services, heavy electrical equipment, tax accounting, scientific and related consulting services, charter freight air transportation, Information technology consulting, application hosting services, software diagram and design, computer aided design, communication equipment, electronics manufacturing equipment, computer components, chemicals. It seeks to invest in the United States. The fund typically invests between $10 million and $35 million in companies with enterprise values between $100 million and $1500 million including complex situations. It prefers to make equity investments in companies for an ownership stake.