Critical Analysis: MidCap Financial Investment (NASDAQ:MFIC) vs. Jefferies Financial Group (NYSE:JEF)

MidCap Financial Investment (NASDAQ:MFIC) and Jefferies Financial Group (NYSE:JEF) are both finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their earnings, dividends, institutional ownership, risk, profitability, analyst recommendations and valuation.

Valuation & Earnings

This table compares MidCap Financial Investment and Jefferies Financial Group”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$320.88 million	3.07	$63.17 million	$0.66	16.18
Jefferies Financial Group	$10.82 billion	0.73	$710.47 million	$2.83	13.47

Jefferies Financial Group has higher revenue and earnings than MidCap Financial Investment. Jefferies Financial Group is trading at a lower price-to-earnings ratio than MidCap Financial Investment, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares MidCap Financial Investment and Jefferies Financial Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	19.69%	10.43%	4.22%
Jefferies Financial Group	6.56%	7.27%	1.07%

Institutional & Insider Ownership

28.5% of MidCap Financial Investment shares are held by institutional investors. Comparatively, 60.9% of Jefferies Financial Group shares are held by institutional investors. 0.8% of MidCap Financial Investment shares are held by insiders. Comparatively, 19.9% of Jefferies Financial Group shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Dividends

MidCap Financial Investment pays an annual dividend of $1.24 per share and has a dividend yield of 11.6%. Jefferies Financial Group pays an annual dividend of $1.60 per share and has a dividend yield of 4.2%. MidCap Financial Investment pays out 187.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Jefferies Financial Group pays out 56.5% of its earnings in the form of a dividend. Jefferies Financial Group has raised its dividend for 2 consecutive years.

Analyst Recommendations

This is a summary of current recommendations and price targets for MidCap Financial Investment and Jefferies Financial Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	0	7	2	0	2.22
Jefferies Financial Group	1	3	3	0	2.29

MidCap Financial Investment currently has a consensus price target of $11.54, indicating a potential upside of 8.01%. Jefferies Financial Group has a consensus price target of $60.00, indicating a potential upside of 57.41%. Given Jefferies Financial Group’s stronger consensus rating and higher possible upside, analysts clearly believe Jefferies Financial Group is more favorable than MidCap Financial Investment.

Volatility & Risk

MidCap Financial Investment has a beta of 0.78, suggesting that its share price is 22% less volatile than the S&P 500. Comparatively, Jefferies Financial Group has a beta of 1.52, suggesting that its share price is 52% more volatile than the S&P 500.

Summary

Jefferies Financial Group beats MidCap Financial Investment on 11 of the 17 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.

About Jefferies Financial Group

Jefferies Financial Group Inc. operates as an investment banking and capital markets firm in the Americas, Europe, the Middle East, and the Asia-Pacific. The company operates in two segments, Investment Banking and Capital Markets, and Asset Management. It provides investment banking, advisory services with respect to mergers or acquisitions, debt financing, restructurings or recapitalizations, and private capital advisory transactions; underwriting and placement services related to corporate debt, municipal bonds, mortgage-backed and asset-backed securities, equity and equity-linked securities, and loan syndication services; and corporate lending services. The company also offers financing, securities lending, and other prime brokerage services; equities research, sales, and trading services; wealth management services; and online foreign exchange trading services. In addition, it provides investment grade distressed debt securities, U.S. and European government and agency securities, municipal bonds, leveraged loans, emerging markets debt, and interest rate and credit index derivative products; and manages and offers services to a diverse group of alternative asset management platforms across a spectrum of investment strategies and asset classes. The company was formerly known as Leucadia National Corporation and changed its name to Jefferies Financial Group Inc. in May 2018. Jefferies Financial Group Inc. was founded in 1962 and is headquartered in New York, New York.