Critical Review: MidCap Financial Investment (NASDAQ:MFIC) and BlackRock MuniYield Quality Fund (NYSE:MQY)

MidCap Financial Investment (NASDAQ:MFIC) and BlackRock MuniYield Quality Fund (NYSE:MQY) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, valuation, institutional ownership, dividends, risk and analyst recommendations.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for MidCap Financial Investment and BlackRock MuniYield Quality Fund, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	0	3	4	0	2.57
BlackRock MuniYield Quality Fund	0	0	0	0	0.00

MidCap Financial Investment presently has a consensus price target of $14.71, suggesting a potential upside of 11.39%. Given MidCap Financial Investment’s stronger consensus rating and higher probable upside, analysts plainly believe MidCap Financial Investment is more favorable than BlackRock MuniYield Quality Fund.

Dividends

MidCap Financial Investment pays an annual dividend of $1.52 per share and has a dividend yield of 11.5%. BlackRock MuniYield Quality Fund pays an annual dividend of $0.70 per share and has a dividend yield of 5.8%. MidCap Financial Investment pays out 97.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

28.5% of MidCap Financial Investment shares are held by institutional investors. Comparatively, 25.5% of BlackRock MuniYield Quality Fund shares are held by institutional investors. 1.1% of MidCap Financial Investment shares are held by insiders. Comparatively, 1.0% of BlackRock MuniYield Quality Fund shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares MidCap Financial Investment and BlackRock MuniYield Quality Fund’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	37.05%	11.37%	4.70%
BlackRock MuniYield Quality Fund	N/A	N/A	N/A

Valuation & Earnings

This table compares MidCap Financial Investment and BlackRock MuniYield Quality Fund”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$121.29 million	10.21	$118.76 million	$1.56	8.47
BlackRock MuniYield Quality Fund	$43.54 million	20.33	N/A	N/A	N/A

MidCap Financial Investment has higher revenue and earnings than BlackRock MuniYield Quality Fund.

Volatility and Risk

MidCap Financial Investment has a beta of 1.49, meaning that its share price is 49% more volatile than the S&P 500. Comparatively, BlackRock MuniYield Quality Fund has a beta of 0.52, meaning that its share price is 48% less volatile than the S&P 500.

Summary

MidCap Financial Investment beats BlackRock MuniYield Quality Fund on 11 of the 13 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.

About BlackRock MuniYield Quality Fund

BlackRock MuniYield Quality Fund, Inc. is a close ended fixed income mutual fund launched by BlackRock, Inc. It is managed by BlackRock Advisors, LLC. The fund invests in fixed income markets. It invests in long-term municipal obligations the interest on which is exempt from federal income taxes. The fund also invests in short-term securities. BlackRock MuniYield Quality Fund, Inc. was formed on July 21, 1992 and is domiciled in United States.