New Mountain Finance (NMFC) and Its Competitors Critical Review

New Mountain Finance (NASDAQ: NMFC) is one of 40 public companies in the “Investors, not elsewhere classified” industry, but how does it weigh in compared to its peers? We will compare New Mountain Finance to related companies based on the strength of its institutional ownership, risk, earnings, valuation, profitability, dividends and analyst recommendations.

Insider and Institutional Ownership

34.0% of New Mountain Finance shares are owned by institutional investors. Comparatively, 30.8% of shares of all “Investors, not elsewhere classified” companies are owned by institutional investors. 9.1% of New Mountain Finance shares are owned by company insiders. Comparatively, 8.7% of shares of all “Investors, not elsewhere classified” companies are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Valuation & Earnings

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

Gross Revenue Net Income Price/Earnings Ratio
New Mountain Finance $276.51 million $112.56 million 7.61
New Mountain Finance Competitors $154.27 million $45.68 million 6.17

New Mountain Finance has higher revenue and earnings than its peers. New Mountain Finance is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Mountain Finance 0 0 0 0 N/A
New Mountain Finance Competitors 474 1054 825 42 2.18

As a group, “Investors, not elsewhere classified” companies have a potential upside of 11.39%. Given New Mountain Finance’s peers higher probable upside, analysts plainly believe New Mountain Finance has less favorable growth aspects than its peers.

Risk and Volatility

New Mountain Finance has a beta of 1.19, meaning that its stock price is 19% more volatile than the S&P 500. Comparatively, New Mountain Finance’s peers have a beta of 0.79, meaning that their average stock price is 21% less volatile than the S&P 500.

Dividends

New Mountain Finance pays an annual dividend of $1.20 per share and has a dividend yield of 12.4%. New Mountain Finance pays out 94.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Investors, not elsewhere classified” companies pay a dividend yield of 12.2% and pay out 80.8% of their earnings in the form of a dividend.

Profitability

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

Net Margins Return on Equity Return on Assets
New Mountain Finance -17.83% 10.54% 3.96%
New Mountain Finance Competitors -110.13% 5.87% 2.48%

Summary

New Mountain Finance beats its peers on 9 of the 12 factors compared.

About New Mountain Finance

New Mountain Finance Corporation is a Business Development Company specializing in investments in middle market companies and debt securities at various levels of the capital structure, including first and second lien debt, unsecured notes, bonds, and mezzanine securities. It invests in various industries that include software, education, business services, distribution and logistics, federal services, healthcare services and products, healthcare facilities, energy, media, consumer and industrial services, healthcare Information Technology, Information Technology and services, specialty chemicals and materials, telecommunication, retail, and power generation. It seeks to invest in United States. It typically invests between $10 million and $50 million. Within middle market it seeks to invest in companies having EBITDA between $20 million and $200 million. It prefers to invest in equity interests, such as preferred stock, common stock, warrants, or options received in connection with its debt investments and directly in the equity of private companies. The fund makes investments through both primary originations and open-market secondary purchases. It invests primarily in debt securities that are rated below investment grade and have contractual unlevered returns of 10% to 15%. The firm may also invest in distressed debt and related opportunities and prefers to invest in targets having private equity sponsorship. It seeks to hold its investments between five years and ten years. The fund prefer to have majority stake in companies.

Receive News & Ratings for New Mountain Finance Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for New Mountain Finance and related companies with MarketBeat.com's FREE daily email newsletter.