New Mountain Finance (NASDAQ:NMFC – Get Free Report) and S&P Global (NYSE:SPGI – Get Free Report) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, valuation, institutional ownership, risk, profitability, analyst recommendations and dividends.
Volatility and Risk
New Mountain Finance has a beta of 0.57, meaning that its stock price is 43% less volatile than the S&P 500. Comparatively, S&P Global has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500.
Earnings & Valuation
This table compares New Mountain Finance and S&P Global”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 | $327.08 million | 2.04 | $16.49 million | ($0.47) | -15.01 |
| S&P Global | $15.34 billion | 7.81 | $4.47 billion | $16.38 | 24.80 |
S&P Global has higher revenue and earnings than New Mountain Finance. New Mountain Finance is trading at a lower price-to-earnings ratio than S&P Global, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares New Mountain Finance and S&P Global’s 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% |
| S&P Global | 31.37% | 17.74% | 9.24% |
Institutional & Insider Ownership
32.1% of New Mountain Finance shares are held by institutional investors. Comparatively, 87.2% of S&P Global shares are held by institutional investors. 14.9% of New Mountain Finance shares are held by insiders. Comparatively, 0.0% of S&P Global shares are held by 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.
Dividends
New Mountain Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.2%. S&P Global pays an annual dividend of $3.88 per share and has a dividend yield of 1.0%. New Mountain Finance pays out -212.8% of its earnings in the form of a dividend. S&P Global pays out 23.7% 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. S&P Global has increased its dividend for 53 consecutive years. New Mountain Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Analyst Recommendations
This is a summary of current ratings and price targets for New Mountain Finance and S&P Global, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New Mountain Finance | 1 | 4 | 0 | 0 | 1.80 |
| S&P Global | 0 | 2 | 18 | 0 | 2.90 |
New Mountain Finance presently has a consensus price target of $8.25, indicating a potential upside of 16.92%. S&P Global has a consensus price target of $523.59, indicating a potential upside of 28.88%. Given S&P Global’s stronger consensus rating and higher possible upside, analysts clearly believe S&P Global is more favorable than New Mountain Finance.
Summary
S&P Global beats New Mountain Finance on 14 of the 17 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 S&P Global
S&P Global, Inc. engages in the provision of transparent and independent ratings, benchmarks, analytics, and data to the capital and commodity markets worldwide. It operates through the following segments: Market Intelligence, Ratings, Commodity Insights, Mobility, Indices, and Engineering Solutions. The Market Intelligence segment provides multi-asset-class data and analytics integrated with purpose-built workflow solutions. The Ratings segment is involved in credit ratings, research, and analytics, offering investors and other market participants information, ratings, and benchmarks. The Commodity Insights segment focuses on information and benchmark prices for the commodity and energy markets. The Mobility segment offers solutions serving the full automotive value chain including vehicle manufacturers, automotive suppliers, mobility service providers, retailers, consumers, and finance and insurance companies. The Engineering Solutions segment engages in advanced knowledge discovery technologies, research tools, and software-based engineering decision engines to advance innovation, maximize productivity, improve quality, and reduce risk. The company was founded by James H. McGraw and John A. Hill in 1917 and is headquartered in New York, NY.
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