CM Finance (NASDAQ:CMFN) and Fairfax Financial (OTCMKTS:FFXDF) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, earnings, profitability, risk, analyst recommendations, valuation and dividends.

Profitability

This table compares CM Finance and Fairfax Financial’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CM Finance -13.35% 11.75% 5.97%
Fairfax Financial N/A 0.95% 0.73%

Volatility and Risk

CM Finance has a beta of 1.29, indicating that its stock price is 29% more volatile than the S&P 500. Comparatively, Fairfax Financial has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent ratings and price targets for CM Finance and Fairfax Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CM Finance 0 0 0 0 N/A
Fairfax Financial 0 0 1 0 3.00

Insider and Institutional Ownership

44.5% of CM Finance shares are held by institutional investors. Comparatively, 0.2% of Fairfax Financial shares are held by institutional investors. 1.9% of CM Finance shares are held 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.

Earnings and Valuation

This table compares CM Finance and Fairfax Financial’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
CM Finance $40.79 million 1.05 $15.62 million $1.39 2.26
Fairfax Financial $712.69 million 1.68 $516.34 million N/A N/A

Fairfax Financial has higher revenue and earnings than CM Finance.

Summary

Fairfax Financial beats CM Finance on 6 of the 11 factors compared between the two stocks.

About CM Finance

CM Finance Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, and recapitalization investments. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest in companies with EBITDA more than $15 million. The fund is based in New York, New York.

About Fairfax Financial

Fairfax India Holdings Corporation, an investment holding company, engages in the investment activities in India. It invests in public and private equity securities and debt instruments in India and Indian businesses, or other businesses with customers, suppliers, or business primarily conducted in, or dependent on, India. The company was founded in 2014 and is headquartered in Toronto, Canada. Fairfax India Holdings Corporation is a subsidiary of Fairfax Financial Holdings Limited.

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