BlackRock TCP Capital Corp. (TCPC) Stock Analysis and Metrics

Sector: Financial Services Industry: Asset Management CIK: 0001370755

Market Cap 259.53 Mn

P/B 0.30

P/E 3.36

P/S 1.54

ROIC (Qtr) 10.22

Div Yield % 35.65

Rev 1y % (Qtr) -28.78

Total Debt (Qtr) 1.06 Bn

Debt/Equity (Qtr) 1.43

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About

BlackRock TCP Capital Corp., also known as TCP Capital Corp., operates as a business development company (BDC) in the investment industry. This Delaware corporation has elected to be regulated under the Investment Company Act of 1940, with its primary business centering on investments in debt securities of middle-market companies, those with enterprise values ranging between $100 million and $1.5 billion. The company's revenue generation primarily stems from contractual interest payments on debt investments, origination and similar fees, and equity...

BlackRock TCP Capital Corp., also known as TCP Capital Corp., operates as a business development company (BDC) in the investment industry. This Delaware corporation has elected to be regulated under the Investment Company Act of 1940, with its primary business centering on investments in debt securities of middle-market companies, those with enterprise values ranging between $100 million and $1.5 billion.

The company's revenue generation primarily stems from contractual interest payments on debt investments, origination and similar fees, and equity appreciation through options, warrants, conversion rights, or direct equity investments. BlackRock TCP Capital Corp.'s investment activities are managed by Tennenbaum Capital Partners, LLC, a wholly-owned indirect subsidiary of BlackRock, Inc., a prominent investment management and advisory services firm.

Diversification is a key strategy for BlackRock TCP Capital Corp., with its investment portfolio spanning various industries such as healthcare, technology, consumer products, and energy. As of December 31, 2023, the company's investment portfolio comprised 142 portfolio companies, with approximately 89.3% invested in debt securities and 10.7% in equity investments. The average portfolio company investment at fair value stood at around $11.0 million.

The company's investment process is designed to leverage strategic advantages, including a strong brand name as a specialty lender to the middle-market and diverse in-house expertise and skills. The investment process involves rigorous deal sourcing, thorough due diligence, and strategic structuring. Deal sourcing is primarily focused on building relationships with key sources of investment opportunities, including investment bankers, financial advisors, attorneys, and industry executives.

The company's competitive advantages are bolstered by its strong brand name, diverse in-house expertise and skills, and its capability to provide customized financing solutions to middle-market companies. Key competitors within the industry include other BDCs, private equity firms, and hedge funds that invest in middle-market companies.

BlackRock TCP Capital Corp.'s customers are middle-market companies seeking financing to support their growth and expansion plans. The company's investment committee, which consists of five voting members, is responsible for approving the purchase or sale of any investment. The committee meets weekly and reviews all existing portfolio holdings in detail once per quarter.

The company's brand names and/or trade names of its products and services include BlackRock TCP Capital Corp. and TCP Capital Corp. It is important to note that, as a BDC, BlackRock TCP Capital Corp. primarily focuses on managing investments and does not produce physical products or offer direct services to consumers.

Investment thesis

Bull case

Strong operating cash flow of 186.05M provides 54.78x coverage of SG&A expenses 3.40M, showing efficient operational cost management.
Operating cash flow of 186.05M provides strong 22.35x coverage of operating expenses 8.33M, showing operational efficiency.
Strong free cash flow of 186.05M provides 54.78x coverage of SG&A expenses 3.40M, indicating efficient cost management.
Free cash flow of 186.05M provides solid 22.35x coverage of operating expenses 8.33M, showing operational efficiency.
Operating cash flow of 186.05M exceeds receivables of 25.05M by 7.43x, demonstrating excellent collection efficiency.

Bear case

Operating cash flow of 186.05M provides thin coverage of dividend payments of (111.43M) with a -1.67 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
Free cash flow of 186.05M represents just -1.65x of debt issuance (112.81M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
Operating cash flow of 186.05M is outpaced by equity issuance of (4.99M) (-37.29 ratio), indicating concerning reliance on equity markets for funding operations.
Cash position of 60.99M provides only 0.88x coverage of interest expenses of 69.04M, indicating potential refinancing risks in a rising rate environment.
R&D investment of 0 represents just 0x of SG&A expenses of 3.40M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Asset Management

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	BLK	BlackRock, Inc.	199.59 Bn	85.40	21.98	15.04 Bn
2	BN	BROOKFIELD Corp /ON/	103.94 Bn	31.52	5.64	262.97 Bn
3	AMP	Ameriprise Financial Inc	88.69 Bn	55.02	7.20	5.89 Bn
4	BX	Blackstone Inc.	88.51 Bn	49.39	10.93	12.89 Bn
5	KKR	KKR & Co. Inc.	55.86 Bn	28.33	13.23	53.12 Bn
6	STT	State Street Corp	46.52 Bn	21.77	3.91	34.72 Bn
7	NTRS	Northern Trust Corp	34.14 Bn	33.31	6.71	15.64 Bn
8	RJF	Raymond James Financial Inc	32.89 Bn	37.63	4.14	5.10 Bn

Industry comparisons

Current Valuation	Value	Ind Avg
EV to Assets EV to Assets	0.44	0.94
EV to Cash from Ops. EV/CFO	-7.20	41.10
EV to Debt EV to Debt	0.76	15.28
EV to EBIT EV/EBIT	6.19	23.47
EV to EBITDA EV/EBITDA	5.78	47.80
EV to Free Cash Flow [EV/FCF] EV/FCF	-7.20	38.62
EV to Market Cap EV to Market Cap	3.10	7.81
EV to Revenue EV/Rev	4.78	27.38
Price to Book Value [P/B] P/B	0.30	2.34
Price to Earnings [P/E] P/E	3.36	11.81

Dividend Metrics	Value	Ind Avg
Dividend Coverage Ratio Div Coverage (Qtr)	-0.08	4.66
Dividend Payout Ratio % Div Payout % (Qtr)	-1,091.70	-5.56
Dividend per Basic Share Div per Share (Qtr)	1.31	1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr)	59.87	49.83
Interest Coverage Int. cover (Qtr)	0.87	25.16

Growth Metrics	Value	Ind Avg
Capex Growth (1y) % Capex Growth (1y) %	0.00	-35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr)	-41.45	15.43
Dividend Growth (1y) % Div 1y % (Qtr)	-18.63	1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr)	113.29	-90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr)	0.55	35.24
EBIT Growth (1y) % EBIT 1y % (Qtr)	113.29	-22.13
EBT Growth (1y) % EBT 1y % (Qtr)	75.74	-163.05
EPS Growth (1y) % EPS 1y % (Qtr)	76.00	-20.61
FCF Growth (1y) % FCF 1y % (Qtr)	-28.93	220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr)	1.11	-53.96

Liquidity Ratios	Value	Ind Avg
Asset Utilization Ratio Asset Util Ratio (Qtr)	0.12	0.22
Cash Payout Ratio Cash Payout (Qtr)	0.60	0.36
Cash Ratio Cash Ratio	0.00	0.38
Current Ratio Current Ratio	0.00	0.86
Debt to Equity Ratio Debt/Equity (Qtr)	1.43	0.70
Interest Cover Ratio Int Coverage (Qtr)	0.87	25.16
Times Interest Earned Times Interest Earned (Qtr)	0.87	25.16

Profitability	Value	Ind Avg
EBITDA Margin % EBITDA Margin % (Qtr)	27.30	-114.76
EBIT Margin % EBIT Margin % (Qtr)	27.31	-127.24
EBT Margin % EBT Margin % (Qtr)	-4.20	-150.97
Gross Margin % Gross Margin % (Qtr)	92.30	67.88
Net Profit Margin % Net Margin % (Qtr)	-4.20	-148.68

Research Tools

BlackRock TCP Capital Corp. (NASDAQ: TCPC)

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Investment thesis

Bull case

Bear case

Peer comparison

Industry comparisons

Research Tools

BlackRock TCP Capital Corp. (NASDAQ: TCPC)

About

Investment thesis

Bull case

Bear case

Peer comparison

Industry comparisons

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