New Mountain Finance (NASDAQ:NMFC – Get Free Report) and Medallion Financial (NASDAQ:MFIN – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their risk, valuation, institutional ownership, earnings, analyst recommendations, dividends and profitability.
Valuation and Earnings
This table compares New Mountain Finance and Medallion Financial”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| New Mountain Finance | $371.67 million | 2.31 | $113.44 million | $0.65 | 12.80 |
| Medallion Financial | $302.03 million | 0.79 | $35.88 million | $1.71 | 6.01 |
Profitability
This table compares New Mountain Finance and Medallion Financial’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| New Mountain Finance | 20.84% | 10.42% | 4.34% |
| Medallion Financial | 12.12% | 9.28% | 1.55% |
Analyst Recommendations
This is a summary of current ratings and target prices for New Mountain Finance and Medallion Financial, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New Mountain Finance | 1 | 6 | 0 | 0 | 1.86 |
| Medallion Financial | 0 | 2 | 1 | 0 | 2.33 |
New Mountain Finance currently has a consensus price target of $10.17, suggesting a potential upside of 22.20%. Medallion Financial has a consensus price target of $12.00, suggesting a potential upside of 16.85%. Given New Mountain Finance’s higher possible upside, analysts plainly believe New Mountain Finance is more favorable than Medallion Financial.
Volatility and 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, Medallion Financial has a beta of 0.77, suggesting that its share price is 23% less volatile than the S&P 500.
Institutional & Insider Ownership
32.1% of New Mountain Finance shares are held by institutional investors. Comparatively, 40.6% of Medallion Financial shares are held by institutional investors. 11.7% of New Mountain Finance shares are held by company insiders. Comparatively, 24.6% of Medallion Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Dividends
New Mountain Finance pays an annual dividend of $1.28 per share and has a dividend yield of 15.4%. Medallion Financial pays an annual dividend of $0.48 per share and has a dividend yield of 4.7%. New Mountain Finance pays out 196.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Medallion Financial pays out 28.1% of its earnings in the form of a dividend.
Summary
New Mountain Finance beats Medallion Financial on 9 of the 16 factors compared between the two stocks.
About New Mountain Finance
New Mountain Finance Corporation (Nasdaq: NMFC), a business development company is a private equity / buyouts and loan fund specializes in directly investing and lending to middle market companies in defensive growth industries. The fund prefers investing in buyout and middle market companies. It also makes investments in debt securities at all levels of the capital structure including first and second lien debt, unsecured notes, and mezzanine securities. In some cases, its investments may also include equity interests. It targets energy, engineering and consulting services, specialty chemicals and materials, trading companies and distributors, commercial printing, diversified support services, education services, environmental and facilities services, office services and supplies, media, distributors, health care services, health care facilities, application software, business services, systems software, federal services, distribution and logistics, interactive home entertainment, telecommunication services, hydroelectric power generation, electric power generation by fossil fuels, electric power generation by nuclear fuels, health care technology, and security and alarm services. The fund seeks to invest in United States of America. It seeks to invest between $10 million and $125 million per transaction. The firm invests through both primary originations and open-market secondary purchases. It invests in companies with EBITDA between $10 million and $200 million. The fund seeks a majority stake in its portfolio companies.
About Medallion Financial
Medallion Financial Corp., together with its subsidiaries, operates as a specialty finance company in the United States. It operates in four segments: Recreation Lending, Home Improvement Lending, Commercial Lending, and Taxi Medallion Lending. The company offers loans that finance consumer purchases of recreational vehicles, boats, and other consumer recreational equipment; consumer financing for window, siding, and roof replacement, swimming pool installations, and other home improvement projects; senior and subordinated loans for the purchase of equipment and related assets necessary to open a new business, or purchase or improvement of an existing business; and taxi medallion loans to individuals and small to mid-size businesses. It also provides debt, mezzanine, and equity investment capital to companies in various commercial industries; and raises deposits and conducts other banking activities. Medallion Financial Corp. was incorporated in 1995 and is headquartered in New York City, New York.
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