Triangle Capital (NYSE:TCAP) & Houlihan Lokey (HLI) Financial Analysis

Triangle Capital (NYSE:TCAP) and Houlihan Lokey (NYSE:HLI) are both finance companies, but which is the better stock? We will compare the two companies based on the strength of their valuation, profitability, earnings, risk, analyst recommendations, institutional ownership and dividends.

Profitability

This table compares Triangle Capital and Houlihan Lokey’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Triangle Capital N/A N/A N/A
Houlihan Lokey 14.63% 21.01% 13.95%

Earnings & Valuation

This table compares Triangle Capital and Houlihan Lokey’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Triangle Capital N/A N/A N/A N/A N/A
Houlihan Lokey $963.36 million 3.31 $172.28 million $2.39 20.38

Houlihan Lokey has higher revenue and earnings than Triangle Capital.

Dividends

Triangle Capital pays an annual dividend of $1.20 per share. Houlihan Lokey pays an annual dividend of $1.08 per share and has a dividend yield of 2.2%. Houlihan Lokey pays out 45.2% of its earnings in the form of a dividend. Houlihan Lokey has raised its dividend for 3 consecutive years. Houlihan Lokey is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Institutional and Insider Ownership

50.1% of Triangle Capital shares are owned by institutional investors. Comparatively, 52.6% of Houlihan Lokey shares are owned by institutional investors. 3.5% of Triangle Capital shares are owned by company insiders. Comparatively, 80.5% of Houlihan Lokey shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and target prices for Triangle Capital and Houlihan Lokey, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Triangle Capital 0 1 0 0 2.00
Houlihan Lokey 0 1 5 0 2.83

Triangle Capital presently has a consensus price target of $13.00, indicating a potential upside of ∞. Houlihan Lokey has a consensus price target of $51.67, indicating a potential upside of 6.05%. Given Triangle Capital’s higher probable upside, research analysts clearly believe Triangle Capital is more favorable than Houlihan Lokey.

Summary

Houlihan Lokey beats Triangle Capital on 10 of the 12 factors compared between the two stocks.

Triangle Capital Company Profile

Triangle Capital Corporation is a business development company specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic. The firm makes equity investments between $1 million and $25 million and debt investments between $5 million and $30 million per transaction, in companies having annual revenues between $20 million and $200 million and EBITDA between $3 million and $35 million and can also co-invest. It typically makes investments between $5 million and $35 million. It primarily invests in senior subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The firm also invests in senior debt securities secured by first lien security interests in portfolio companies. Triangle Capital Corporation was incorporated on October 10, 2006 and is based in Raleigh, North Carolina.

Houlihan Lokey Company Profile

Houlihan Lokey, Inc., an investment banking company, provides merger and acquisition (M&A), financing, financial restructuring, and financial advisory services worldwide. It operates in three segments: Corporate Finance, Financial Restructuring, and Financial Advisory Services. The Corporate Finance segment offers general financial advisory services; and advises public and private institutions on buy-side and sell-side transactions, leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, as well as financial sponsors on various transactions. It also provides financing solutions and capital-raising advisory services for publicly-held and multinational corporations, financial sponsors, and privately-held companies. The Financial Restructuring segment advises debtors, creditors, and other parties-in-interest related to recapitalization/deleveraging transactions. It also provides a range of advisory services, including structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor in possession financing. The Financial Advisory Services segment offers valuations of various assets, such as companies, illiquid debt and equity securities, and intellectual property. It also provides fairness opinions in connection with M&A and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations; and other types of financial opinions in connection with other transactions. In addition, this segment offers dispute resolution and strategic consulting services. It serves corporations, financial sponsors, and government agencies. The company was founded in 1972 and is headquartered in Los Angeles, California.

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