Valuation Scorecard: Stock Rating B-Positive (3/6/24)-BlackRock TCP Capital Corp (TCPC).

At the current price of $10, what is the market’s view of Blackrock TCP Capital’s future operating performance? Blackrock TCP Capital’s common shares will need to reach $18 to achieve average annual stock market performance of 9.0% over the next 6 years. Upper quartile performance will require a $21 Blackrock TCP Capital stock price by 2028.

Executive Summary

• Blackrock TCP Capital’s important characteristics: below average expected growth, below average financial strength, low stability, and very low profitability. A big negative influence on Blackrock TCP Capital’s valuation is its poor Risk Profile.
• Low valuation, below market shareholder returns. Current valuation levels are below average relative to the Blackrock TCP Capital Peer Group. Recent market returns have underperformed the Blackrock TCP Capital Peer Group. Total shareholder returns expected to significantly beat the overall equity market. Based on current investor expectations, Blackrock TCP Capital shares should reach a level of $20 by 2028 — an 21.8% per year total shareholder return. A 2028 stock price of $18 would reflect median performance and a price of $21 would be required to reach upper quartile performance.
• Blackrock TCP Capital’s historical growth is average. Historical growth has been average relative to the Blackrock TCP Capital Peer Group and forecasted growth is relatively below average. EPS Growth has been superior. Revenue Growth has lagged. Blackrock TCP Capital’s historical income statement growth and balance sheet growth have diverged. Revenue growth has paralleled asset growth; earnings growth has exceeded equity growth resulting in an improving return on equity.
• Asset Turnover is group leading. Pretax Margin, Pretax ROA, and Return on Equity are group lagging. The company has normal cash needs.
• Risk Profile has been Blackrock TCP Capital’s biggest valuation weakness. Blackrock TCP Capital’s risk profile is unfavorable. Overall variability has been only average with only average revenue variability, very high E.P.S. variability, Financial Strength is below average and earnings’ expectations are only average. The debt/capital ratio has risen.

Click to read the full Scorecard report