Critical Contrast: Sound Point Meridian Capital (NYSE:SPMC) and Cannae (NYSE:CNNE)

Cannae (NYSE:CNNE) and Sound Point Meridian Capital (NYSE:SPMC) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, dividends, profitability, earnings, analyst recommendations, institutional ownership and valuation.

Valuation & Earnings

This table compares Cannae and Sound Point Meridian Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Cannae	$437.20 million	2.39	-$304.60 million	($6.70)	-2.79
Sound Point Meridian Capital	N/A	N/A	N/A	$1.42	12.55

Sound Point Meridian Capital has lower revenue, but higher earnings than Cannae. Cannae is trading at a lower price-to-earnings ratio than Sound Point Meridian Capital, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Cannae and Sound Point Meridian Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Cannae	-94.12%	-18.19%	-14.58%
Sound Point Meridian Capital	N/A	N/A	N/A

Dividends

Cannae pays an annual dividend of $0.60 per share and has a dividend yield of 3.2%. Sound Point Meridian Capital pays an annual dividend of $3.00 per share and has a dividend yield of 16.8%. Cannae pays out -9.0% of its earnings in the form of a dividend. Sound Point Meridian Capital pays out 211.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of recent ratings and price targets for Cannae and Sound Point Meridian Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Cannae	0	0	2	0	3.00
Sound Point Meridian Capital	0	1	1	1	3.00

Cannae presently has a consensus target price of $24.00, suggesting a potential upside of 28.58%. Sound Point Meridian Capital has a consensus target price of $21.25, suggesting a potential upside of 19.25%. Given Cannae’s higher probable upside, research analysts plainly believe Cannae is more favorable than Sound Point Meridian Capital.

Institutional and Insider Ownership

88.1% of Cannae shares are held by institutional investors. 10.9% of Cannae shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Volatility and Risk

Cannae has a beta of 1.08, indicating that its stock price is 8% more volatile than the S&P 500. Comparatively, Sound Point Meridian Capital has a beta of 0.26, indicating that its stock price is 74% less volatile than the S&P 500.

About Cannae

Cannae Holdings, Inc. is a principal investment firm. The firm primarily invests in restaurants, technology enabled healthcare services, financial services and more. It takes both minority and majority stakes. Cannae Holdings, Inc. was founded in 2014 and is based in Las Vegas, Nevada.

About Sound Point Meridian Capital

Sound Point Meridian Capital Inc. is an externally managed, non-diversified closed-end management investment company. Its investment objective is to generate high current income, with a secondary objective to generate capital appreciation, by investing primarily in third-party collateralized loan obligation equity and mezzanine tranches. Sound Point Meridian Capital Inc. is based in NEW YORK.