Critical Analysis: MFS Charter Income Trust (MCR) & TPG Specialty Lending (TSLX)

MFS Charter Income Trust (NYSE: MCR) and TPG Specialty Lending (NYSE:TSLX) are both small-cap financials companies, but which is the better business? We will contrast the two companies based on the strength of their risk, analyst recommendations, institutional ownership, valuation, profitability, earnings and dividends.

Analyst Ratings

This is a summary of current recommendations for MFS Charter Income Trust and TPG Specialty Lending, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MFS Charter Income Trust 0 0 0 0 N/A
TPG Specialty Lending 0 1 2 0 2.67

TPG Specialty Lending has a consensus target price of $21.33, suggesting a potential upside of 3.11%. Given TPG Specialty Lending’s higher probable upside, analysts plainly believe TPG Specialty Lending is more favorable than MFS Charter Income Trust.

Volatility and Risk

MFS Charter Income Trust has a beta of 0.46, meaning that its share price is 54% less volatile than the S&P 500. Comparatively, TPG Specialty Lending has a beta of 0.67, meaning that its share price is 33% less volatile than the S&P 500.

Profitability

This table compares MFS Charter Income Trust and TPG Specialty Lending’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MFS Charter Income Trust N/A N/A N/A
TPG Specialty Lending 56.43% 12.63% 7.53%

Insider & Institutional Ownership

63.1% of TPG Specialty Lending shares are held by institutional investors. 4.8% of TPG Specialty Lending shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

TPG Specialty Lending pays an annual dividend of $1.56 per share and has a dividend yield of 7.5%. MFS Charter Income Trust does not pay a dividend. TPG Specialty Lending pays out 79.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares MFS Charter Income Trust and TPG Specialty Lending’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MFS Charter Income Trust N/A N/A N/A N/A N/A
TPG Specialty Lending $192.41 million 6.48 $107.33 million $1.96 10.56

TPG Specialty Lending has higher revenue and earnings than MFS Charter Income Trust.

Summary

TPG Specialty Lending beats MFS Charter Income Trust on 10 of the 11 factors compared between the two stocks.

About MFS Charter Income Trust

MFS Charter Income Trust (Fund) is a diversified closed-end management investment company. The Fund’s investment objective is to seek high current income, but may also consider capital appreciation. The Fund normally invests in debt instruments. The Fund also invests in corporate bonds of the United States and/or foreign issuers, the United States Government securities, foreign government securities, mortgage-backed and other asset-backed securities and/or debt instruments of issuers located in emerging market countries. The Fund’s portfolio comprises bonds, floating rate loans, equities, cash and cash equivalent and other. It invests in a range of Fixed income sectors, such as high yield corporates non-united states government bonds, investment grade corporates, emerging markets bonds, commercial mortgage-backed securities, asset-backed securities and collateralized debt obligations. Massachusetts Financial Services Company is the Fund’s investment advisor.

About TPG Specialty Lending

TPG Specialty Lending, Inc. is an externally managed, closed-end, non-diversified management investment company. The Company is a specialty finance company focused on lending to middle-market companies. It seeks to generate current income primarily in the United States-domiciled middle-market companies through direct originations of senior secured loans and originations of mezzanine and unsecured loans and investments in corporate bonds and equity securities. The Company invests in first-lien debt, second-lien debt, mezzanine and unsecured debt and equity and other investments. Its first-lien debt may include standalone first-lien loans; last out first-lien loans; unitranche loans and secured corporate bonds. Its second-lien debt may include secured loans and secured corporate bonds, with a secondary priority behind first-lien debt. As of December 31, 2016, the Company’s portfolio was invested across 19 different industries. The Company’s investment advisor is TSL Advisers, LLC.

Receive News & Ratings for MFS Charter Income Trust Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for MFS Charter Income Trust and related companies with MarketBeat.com's FREE daily email newsletter.

Leave a Reply