Critical Review: BlackRock Income Trust (NYSE:BKT) and Solar Senior Capital (NYSE:SUNS)

BlackRock Income Trust (NYSE:BKT) and Solar Senior Capital (NASDAQ:SUNS) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their profitability, risk, dividends, institutional ownership, earnings, valuation and analyst recommendations.

Earnings & Valuation

This table compares BlackRock Income Trust and Solar Senior Capital’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
BlackRock Income Trust N/A N/A N/A N/A N/A
Solar Senior Capital $40.09 million 5.11 $22.94 million $1.41 9.05

Solar Senior Capital has higher revenue and earnings than BlackRock Income Trust.

Insider and Institutional Ownership

46.6% of BlackRock Income Trust shares are held by institutional investors. Comparatively, 21.1% of Solar Senior Capital shares are held by institutional investors. 5.7% of Solar Senior Capital shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings for BlackRock Income Trust and Solar Senior Capital, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
BlackRock Income Trust 0 0 0 0 N/A
Solar Senior Capital 0 0 2 0 3.00

Solar Senior Capital has a consensus target price of $17.00, indicating a potential upside of 33.23%. Given Solar Senior Capital’s higher probable upside, analysts plainly believe Solar Senior Capital is more favorable than BlackRock Income Trust.

Volatility & Risk

BlackRock Income Trust has a beta of 0.16, indicating that its stock price is 84% less volatile than the S&P 500. Comparatively, Solar Senior Capital has a beta of 1.31, indicating that its stock price is 31% more volatile than the S&P 500.

Profitability

This table compares BlackRock Income Trust and Solar Senior Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
BlackRock Income Trust N/A N/A N/A
Solar Senior Capital -16.84% 8.87% 3.76%

Dividends

BlackRock Income Trust pays an annual dividend of $0.41 per share and has a dividend yield of 6.6%. Solar Senior Capital pays an annual dividend of $1.20 per share and has a dividend yield of 9.4%. Solar Senior Capital pays out 85.1% 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 Income Trust has raised its dividend for 2 consecutive years and Solar Senior Capital has raised its dividend for 3 consecutive years. Solar Senior Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Solar Senior Capital beats BlackRock Income Trust on 9 of the 12 factors compared between the two stocks.

About BlackRock Income Trust

BlackRock Income Trust, Inc. is a closed ended fixed income mutual fund launched by BlackRock, Inc. The fund is managed by BlackRock Advisors, LLC. It invests in the fixed income markets of the United States. The fund invests in securities of companies that operate across diversified sectors. It invests in securities such as U.S. government sponsored agency securities, non-agency mortgage-backed securities, asset-backed securities, and U.S. treasury obligations. The fund invests its assets in securities that are issued or guaranteed by the US government or one of its agencies or instrumentalities or rated at the time of investment either AAA by S&P or Aaa by Moody's. BlackRock Income Trust, Inc. was formed on July 22, 1988 and is domiciled in the United States.

About Solar Senior Capital

Solar Senior Capital Ltd. is a business development company specializing in investments in leveraged, middle-market companies in the United States. The fund invests in the form of senior secured loans, including first lien, unitranche, and second lien debt instruments. It does not invest in start-up companies or companies having speculative business plans. The fund prefers debt investments between $5 million and $30 million in companies with EBITDA between $20 million and $60 million.

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