Critical Analysis: BlackRock MuniYield Quality Fund III (NYSE:MYI) & MidCap Financial Investment (NASDAQ:MFIC)

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

Dividends

MidCap Financial Investment pays an annual dividend of $1.52 per share and has a dividend yield of 11.4%. BlackRock MuniYield Quality Fund III pays an annual dividend of $0.67 per share and has a dividend yield of 6.1%. 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.

Insider & Institutional Ownership

28.5% of MidCap Financial Investment shares are owned by institutional investors. Comparatively, 34.0% of BlackRock MuniYield Quality Fund III shares are owned by institutional investors. 1.1% of MidCap Financial Investment shares are owned by insiders. Comparatively, 1.0% of BlackRock MuniYield Quality Fund III shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and target prices for MidCap Financial Investment and BlackRock MuniYield Quality Fund III, 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 III	0	0	0	0	0.00

MidCap Financial Investment currently has a consensus price target of $14.71, suggesting a potential upside of 10.05%. Given MidCap Financial Investment’s stronger consensus rating and higher probable upside, research analysts plainly believe MidCap Financial Investment is more favorable than BlackRock MuniYield Quality Fund III.

Profitability

This table compares MidCap Financial Investment and BlackRock MuniYield Quality Fund III’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 III	N/A	N/A	N/A

Earnings and Valuation

This table compares MidCap Financial Investment and BlackRock MuniYield Quality Fund III”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$121.29 million	10.34	$118.76 million	$1.56	8.57
BlackRock MuniYield Quality Fund III	$38.59 million	19.33	N/A	N/A	N/A

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

Risk & Volatility

MidCap Financial Investment has a beta of 1.49, meaning that its stock price is 49% more volatile than the S&P 500. Comparatively, BlackRock MuniYield Quality Fund III has a beta of 0.49, meaning that its stock price is 51% less volatile than the S&P 500.

Summary

MidCap Financial Investment beats BlackRock MuniYield Quality Fund III on 10 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 III

BlackRock MuniYield Quality Fund III, Inc. is a closed 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 primarily in a portfolio of long-term investment-grade municipal obligations exempt from federal income taxes. BlackRock MuniYield Quality Fund III, Inc. was formed in April 13, 1992 and is domiciled in United States.