Comparing Sound Point Meridian Capital (NYSE:SPMC) and Monroe Capital (NASDAQ:MRCC)

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

Analyst Ratings

This is a summary of current ratings for Monroe Capital and Sound Point Meridian Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Monroe Capital	0	1	0	0	2.00
Sound Point Meridian Capital	1	2	1	0	2.00

Sound Point Meridian Capital has a consensus price target of $16.10, indicating a potential upside of 79.59%. Given Sound Point Meridian Capital’s higher probable upside, analysts plainly believe Sound Point Meridian Capital is more favorable than Monroe Capital.

Valuation and Earnings

This table compares Monroe Capital and Sound Point Meridian Capital”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Monroe Capital	$286,000.00	340.90	-$5.12 million	($0.23)	-19.57
Sound Point Meridian Capital	N/A	N/A	N/A	($3.53)	-2.54

Sound Point Meridian Capital has lower revenue, but higher earnings than Monroe Capital. Monroe Capital 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 Monroe Capital and Sound Point Meridian Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Monroe Capital	-13.52%	6.59%	2.88%
Sound Point Meridian Capital	N/A	N/A	N/A

Dividends

Monroe Capital pays an annual dividend of $0.36 per share and has a dividend yield of 8.0%. Sound Point Meridian Capital pays an annual dividend of $3.00 per share and has a dividend yield of 33.5%. Monroe Capital pays out -156.5% of its earnings in the form of a dividend. Sound Point Meridian Capital pays out -85.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years.

Risk and Volatility

Monroe Capital has a beta of 0.75, meaning that its share price is 25% less volatile than the S&P 500. Comparatively, Sound Point Meridian Capital has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.

Summary

Monroe Capital beats Sound Point Meridian Capital on 6 of the 11 factors compared between the two stocks.

About Monroe Capital

Monroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.

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.