Head-To-Head Analysis: MVC Capital (NYSE:MVC) vs. European Equity Fund (NYSE:EEA)

MVC Capital (NYSE:MVC) and European Equity Fund (NYSE:EEA) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their profitability, dividends, risk, institutional ownership, valuation, earnings and analyst recommendations.

Insider & Institutional Ownership

49.4% of MVC Capital shares are owned by institutional investors. Comparatively, 52.8% of European Equity Fund shares are owned by institutional investors. 10.0% of MVC Capital shares are owned by company insiders. Comparatively, 0.1% of European Equity Fund shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current recommendations for MVC Capital and European Equity Fund, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MVC Capital 0 1 0 0 2.00
European Equity Fund 0 0 0 0 N/A

MVC Capital currently has a consensus target price of $13.00, indicating a potential upside of 99.69%. Given MVC Capital’s higher probable upside, analysts plainly believe MVC Capital is more favorable than European Equity Fund.

Earnings and Valuation

This table compares MVC Capital and European Equity Fund’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MVC Capital $30.55 million 3.78 $16.32 million $0.65 10.02
European Equity Fund N/A N/A N/A N/A N/A

MVC Capital has higher revenue and earnings than European Equity Fund.

Dividends

MVC Capital pays an annual dividend of $0.68 per share and has a dividend yield of 10.4%. European Equity Fund pays an annual dividend of $0.15 per share and has a dividend yield of 1.8%. MVC Capital pays out 104.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MVC Capital has increased its dividend for 2 consecutive years and European Equity Fund has increased its dividend for 1 consecutive years. MVC Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Profitability

This table compares MVC Capital and European Equity Fund’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MVC Capital -105.03% 5.83% 3.66%
European Equity Fund N/A N/A N/A

Risk & Volatility

MVC Capital has a beta of 1.74, indicating that its share price is 74% more volatile than the S&P 500. Comparatively, European Equity Fund has a beta of 0.98, indicating that its share price is 2% less volatile than the S&P 500.

Summary

MVC Capital beats European Equity Fund on 8 of the 11 factors compared between the two stocks.

About MVC Capital

MVC Capital, Inc. is a business development company specializing in equity, acquisition financing, mezzanine financing, management buyouts, leveraged buildups, corporate partnerships, PIPE transactions, going private transactions, private company recapitalizations, operational turnarounds, and growth and expansion capital transaction financing. The company seeks to invest in mature, small, and middle-market companies. It seeks to invest in companies in the consumer products, business services, industrial manufacturing and services, automotive retailing, energy, food and food service, financial services, insurance, industrial distribution and value-added distribution, medical devices and equipment, specialty chemicals, and security sectors. The company prefers to invest in companies based in the United States. The firm typically invests between $3 million and $25 million for control and non-control stakes in companies with revenues between $10 million and $150 million and EBITDA between $3 million and $25 million. It prefers to be the lead investor in transactions and also co-invests in companies with other private equity sponsors. The company invests in the form of preferred and common equity, and warrants or rights to acquire equity interests; bridge loans; term loans; debt; cash flow loans; senior and subordinated loans; convertible securities; venture capital; mezzanine; and private equity investments. It exits its investments in the form of maturity of loan, public offering, sale, mergers and acquisitions, and financial recapitalizations. It prefers to take majority stake in companies.

About European Equity Fund

The European Equity Fund, Inc. is a closed ended equity mutual fund launched by Deutsche Investment Management Americas Inc. The fund is managed by Deutsche Asset Management International GmbH. It invests in the public equity markets of Europe. The fund seeks to invest in the stocks of companies operating across diversified sectors. It primarily invests in equity or equity-linked securities of companies. The fund seeks to benchmark the performance of its portfolio against the MSCI-EMU Index. It was formerly known as Germany Fund Inc. The European Equity Fund, Inc. was formed on July 23, 1986 and is domiciled in the United States.

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