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

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

Institutional & Insider Ownership

42.4% of Mercury General shares are owned by institutional investors. 35.5% of Mercury General shares are owned by insiders. Comparatively, 0.2% of BlackRock TCP Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

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	2.08%	1.17%	0.25%
BlackRock TCP Capital	18.38%	14.59%	6.09%

Dividends

Mercury General pays an annual dividend of $1.27 per share and has a dividend yield of 2.4%. BlackRock TCP Capital pays an annual dividend of $1.36 per share and has a dividend yield of 13.5%. Mercury General pays out 73.0% of its earnings in the form of a dividend. BlackRock TCP Capital pays out 206.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BlackRock TCP Capital has increased 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.

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Mercury General	$4.63 billion	0.63	$96.34 million	$1.74	30.03
BlackRock TCP Capital	$209.33 million	2.78	$38.47 million	$0.66	15.27

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

Analyst Recommendations

This is a summary of recent recommendations for Mercury General and BlackRock TCP Capital, as reported by MarketBeat.com.

	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 presently has a consensus target price of $33.00, indicating a potential downside of 36.85%. BlackRock TCP Capital has a consensus target price of $11.25, indicating a potential upside of 11.61%. Given BlackRock TCP Capital’s higher probable upside, analysts clearly believe BlackRock TCP Capital is more favorable than Mercury General.

Volatility & Risk

Mercury General has a beta of 0.8, indicating that its share price is 20% less volatile than the S&P 500. Comparatively, BlackRock TCP Capital has a beta of 1.43, indicating that its share price is 43% more volatile than the S&P 500.

Summary

Mercury General beats BlackRock TCP Capital 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.