Palmer Square Capital BDC (NYSE:PSBD – Get Free Report) and New Mountain Finance (NASDAQ:NMFC – Get Free Report) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, earnings, profitability, valuation and risk.
Volatility & Risk
Palmer Square Capital BDC has a beta of 0.71, meaning that its stock price is 29% less volatile than the S&P 500. Comparatively, New Mountain Finance has a beta of 0.79, meaning that its stock price is 21% less volatile than the S&P 500.
Institutional & Insider Ownership
6.5% of Palmer Square Capital BDC shares are held by institutional investors. Comparatively, 32.1% of New Mountain Finance shares are held by institutional investors. 1.0% of Palmer Square Capital BDC shares are held by insiders. Comparatively, 11.7% of New Mountain Finance 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.
Analyst Ratings
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Palmer Square Capital BDC | 0 | 3 | 1 | 0 | 2.25 |
| New Mountain Finance | 1 | 5 | 0 | 0 | 1.83 |
Palmer Square Capital BDC currently has a consensus target price of $13.88, suggesting a potential upside of 13.08%. New Mountain Finance has a consensus target price of $10.60, suggesting a potential upside of 13.49%. Given New Mountain Finance’s higher possible upside, analysts plainly believe New Mountain Finance is more favorable than Palmer Square Capital BDC.
Dividends
Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 11.7%. New Mountain Finance pays an annual dividend of $1.28 per share and has a dividend yield of 13.7%. Palmer Square Capital BDC pays out 257.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. New Mountain Finance pays out 168.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. New Mountain Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Profitability
This table compares Palmer Square Capital BDC and New Mountain Finance’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Palmer Square Capital BDC | 13.51% | 10.91% | 4.15% |
| New Mountain Finance | 23.27% | 10.43% | 4.32% |
Valuation and Earnings
This table compares Palmer Square Capital BDC and New Mountain Finance”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Palmer Square Capital BDC | $23.10 million | 17.06 | $47.67 million | $0.56 | 21.91 |
| New Mountain Finance | $371.67 million | 2.67 | $113.44 million | $0.76 | 12.29 |
New Mountain Finance has higher revenue and earnings than Palmer Square Capital BDC. New Mountain Finance is trading at a lower price-to-earnings ratio than Palmer Square Capital BDC, indicating that it is currently the more affordable of the two stocks.
Summary
New Mountain Finance beats Palmer Square Capital BDC on 11 of the 16 factors compared between the two stocks.
About Palmer Square Capital BDC
Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.
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.
Receive News & Ratings for Palmer Square Capital BDC Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Palmer Square Capital BDC and related companies with MarketBeat.com's FREE daily email newsletter.
