Critical Review: New Mountain Finance (NMFC) versus Its Peers

New Mountain Finance (NASDAQ:NMFC) is one of 1,746 publicly-traded companies in the “Capital Markets” industry, but how does it compare to its rivals? We will compare New Mountain Finance to similar businesses based on the strength of its dividends, institutional ownership, analyst recommendations, valuation, risk, earnings and profitability.

Profitability

This table compares New Mountain Finance and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
New Mountain Finance	-21.29%	10.71%	4.55%
New Mountain Finance Competitors	314.79%	9.90%	3.46%

Volatility & Risk

New Mountain Finance has a beta of 0.58, suggesting that its share price is 42% less volatile than the S&P 500. Comparatively, New Mountain Finance’s rivals have a beta of 0.79, suggesting that their average share price is 21% less volatile than the S&P 500.

Valuation and Earnings

This table compares New Mountain Finance and its rivals revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
New Mountain Finance	-$58.84 million	$16.49 million	-12.36
New Mountain Finance Competitors	$3.11 billion	$397.40 million	15.16

New Mountain Finance’s rivals have higher revenue and earnings than New Mountain Finance. New Mountain Finance is trading at a lower price-to-earnings ratio than its rivals, indicating that it is currently more affordable than other companies in its industry.

Dividends

New Mountain Finance pays an annual dividend of $1.00 per share and has a dividend yield of 15.0%. New Mountain Finance pays out -185.2% of its earnings in the form of a dividend. As a group, “Capital Markets” companies pay a dividend yield of 3.2% and pay out 29.2% of their earnings in the form of a dividend. New Mountain Finance is clearly a better dividend stock than its rivals, given its higher yield and lower payout ratio.

Insider & Institutional Ownership

32.1% of New Mountain Finance shares are held by institutional investors. Comparatively, 30.6% of shares of all “Capital Markets” companies are held by institutional investors. 14.9% of New Mountain Finance shares are held by company insiders. Comparatively, 13.1% of shares of all “Capital Markets” companies are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a summary of current recommendations and price targets for New Mountain Finance and its rivals, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
New Mountain Finance	2	4	0	0	1.67
New Mountain Finance Competitors	5605	20212	22565	650	2.37

New Mountain Finance presently has a consensus target price of $7.50, indicating a potential upside of 12.36%. As a group, “Capital Markets” companies have a potential upside of 23.42%. Given New Mountain Finance’s rivals stronger consensus rating and higher possible upside, analysts plainly believe New Mountain Finance has less favorable growth aspects than its rivals.

Summary

New Mountain Finance rivals beat New Mountain Finance on 9 of the 15 factors compared.

About New Mountain Finance

New Mountain Finance Corporation is a business development company that provides financing to U.S. middle-market businesses. It is externally managed by an affiliate of New Mountain Capital, an alternative investment manager. The company primarily invests in senior secured loans, along with other debt investments and, in some cases, equity securities. Its financing supports businesses across a range of industries and may be used for purposes such as growth, acquisitions, refinancing, or ownership changes.