New Mountain Finance (NASDAQ:NMFC – Get Free Report) and Donnelley Financial Solutions (NYSE:DFIN – Get Free Report) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitability, risk, institutional ownership, valuation, earnings, analyst recommendations and dividends.
Insider and Institutional Ownership
32.1% of New Mountain Finance shares are held by institutional investors. Comparatively, 93.8% of Donnelley Financial Solutions shares are held by institutional investors. 14.9% of New Mountain Finance shares are held by insiders. Comparatively, 5.2% of Donnelley Financial Solutions shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Valuation and Earnings
This table compares New Mountain Finance and Donnelley Financial Solutions”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| New Mountain Finance | -$53.58 million | -12.76 | $16.49 million | ($0.47) | -15.40 |
| Donnelley Financial Solutions | $767.00 million | 1.53 | $32.40 million | $1.45 | 33.02 |
Donnelley Financial Solutions has higher revenue and earnings than New Mountain Finance. New Mountain Finance is trading at a lower price-to-earnings ratio than Donnelley Financial Solutions, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares New Mountain Finance and Donnelley Financial Solutions’ net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| New Mountain Finance | -16.78% | 10.94% | 4.58% |
| Donnelley Financial Solutions | 4.53% | 25.82% | 12.29% |
Volatility and Risk
New Mountain Finance has a beta of 0.57, suggesting that its stock price is 43% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.
Analyst Recommendations
This is a summary of recent ratings and price targets for New Mountain Finance and Donnelley Financial Solutions, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New Mountain Finance | 2 | 4 | 0 | 0 | 1.67 |
| Donnelley Financial Solutions | 0 | 2 | 2 | 1 | 2.80 |
New Mountain Finance presently has a consensus price target of $8.60, indicating a potential upside of 18.78%. Donnelley Financial Solutions has a consensus price target of $61.00, indicating a potential upside of 27.39%. Given Donnelley Financial Solutions’ stronger consensus rating and higher possible upside, analysts plainly believe Donnelley Financial Solutions is more favorable than New Mountain Finance.
Summary
Donnelley Financial Solutions beats New Mountain Finance on 14 of the 15 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 Donnelley Financial Solutions
Donnelley Financial Solutions, Inc. provides innovative software and technology-enabled financial regulatory and compliance solutions in the United States, Asia, Europe, Canada, and internationally. It operates through four segments: Capital Markets Software Solutions (CM-SS); Capital Markets Compliance and Communications Management (CM-CCM); Investment Companies Software Solutions (IC-SS); and Investment Companies Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue and ActiveDisclosure solutions to public and private companies to manage public and private transactional and compliance processes; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro, and ArcRegulatory, as well as services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators and investors. The IC-CCM segment offers tech-enabled solutions for creating, filing and distributing regulatory communications, and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant for Investment Company Act through the SEC’s EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.
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