Financial Review: Bain Capital Specialty Finance (BCSF) and Alta Mesa Resources (AMR)

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Bain Capital Specialty Finance (NYSE:BCSF) and Alta Mesa Resources (NASDAQ:AMR) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, risk, analyst recommendations, institutional ownership, valuation and earnings.

Institutional and Insider Ownership

9.3% of Bain Capital Specialty Finance shares are held by institutional investors. Comparatively, 76.9% of Alta Mesa Resources shares are held by institutional investors. 0.2% of Bain Capital Specialty Finance shares are held by company insiders. Comparatively, 0.2% of Alta Mesa Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Bain Capital Specialty Finance pays an annual dividend of $1.64 per share and has a dividend yield of 8.6%. Alta Mesa Resources does not pay a dividend. Bain Capital Specialty Finance pays out 113.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

This table compares Bain Capital Specialty Finance and Alta Mesa Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bain Capital Specialty Finance 44.85% 7.23% 4.02%
Alta Mesa Resources N/A -2.39% -1.75%

Valuation and Earnings

This table compares Bain Capital Specialty Finance and Alta Mesa Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bain Capital Specialty Finance $99.29 million 9.93 $26.65 million $1.45 13.17
Alta Mesa Resources N/A N/A $1.89 million N/A N/A

Bain Capital Specialty Finance has higher revenue and earnings than Alta Mesa Resources.

Analyst Ratings

This is a breakdown of current recommendations and price targets for Bain Capital Specialty Finance and Alta Mesa Resources, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bain Capital Specialty Finance 0 2 3 0 2.60
Alta Mesa Resources 1 2 1 0 2.00

Bain Capital Specialty Finance currently has a consensus price target of $20.25, suggesting a potential upside of 6.08%. Alta Mesa Resources has a consensus price target of $8.30, suggesting a potential upside of 4,268.42%. Given Alta Mesa Resources’ higher probable upside, analysts clearly believe Alta Mesa Resources is more favorable than Bain Capital Specialty Finance.

Summary

Bain Capital Specialty Finance beats Alta Mesa Resources on 8 of the 12 factors compared between the two stocks.

Bain Capital Specialty Finance Company Profile

Bain Capital Specialty Finance, Inc. operates as a business development company (BDC) specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.

Alta Mesa Resources Company Profile

Alta Mesa Resources, Inc. focuses on the acquisition and development of unconventional oil and natural gas reserves in the Anadarko Basin. It also offers midstream energy services, including crude oil and gas gathering, processing, and marketing to producers of natural gas, natural gas liquids, crude oil, and condensate in the STACK Play region of Oklahoma. The company was formerly known as Silver Run Acquisition Corporation II and changed its name to Alta Mesa Resources, Inc. in February 2018. Alta Mesa Resources, Inc. was founded in 1987 and is based in Houston, Texas.

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