MFS Municipal Income Trust (NYSE:MFM) and Apollo Investment (NASDAQ:AINV) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, institutional ownership, earnings, dividends, risk and analyst recommendations.

Profitability

This table compares MFS Municipal Income Trust and Apollo Investment’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MFS Municipal Income Trust N/A N/A N/A
Apollo Investment 31.99% 9.88% 5.25%

Dividends

MFS Municipal Income Trust pays an annual dividend of $0.35 per share and has a dividend yield of 4.9%. Apollo Investment pays an annual dividend of $1.80 per share and has a dividend yield of 11.1%. Apollo Investment pays out 99.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for MFS Municipal Income Trust and Apollo Investment, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MFS Municipal Income Trust 0 0 0 0 N/A
Apollo Investment 0 4 1 0 2.20

Apollo Investment has a consensus price target of $17.20, indicating a potential upside of 6.17%. Given Apollo Investment’s higher probable upside, analysts plainly believe Apollo Investment is more favorable than MFS Municipal Income Trust.

Valuation & Earnings

This table compares MFS Municipal Income Trust and Apollo Investment’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MFS Municipal Income Trust N/A N/A N/A N/A N/A
Apollo Investment $255.08 million 4.31 $71.95 million $1.81 8.95

Apollo Investment has higher revenue and earnings than MFS Municipal Income Trust.

Insider and Institutional Ownership

12.9% of MFS Municipal Income Trust shares are owned by institutional investors. Comparatively, 42.2% of Apollo Investment shares are owned by institutional investors. 0.8% of MFS Municipal Income Trust shares are owned by company insiders. Comparatively, 0.4% of Apollo Investment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

MFS Municipal Income Trust has a beta of 0.2, meaning that its stock price is 80% less volatile than the S&P 500. Comparatively, Apollo Investment has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Summary

Apollo Investment beats MFS Municipal Income Trust on 9 of the 11 factors compared between the two stocks.

MFS Municipal Income Trust Company Profile

MFS Municipal Income Trust is a close ended fixed income mutual fund launched and managed by Massachusetts Financial Services Company. The fund invests in fixed income markets of the United States. It primarily invests in tax-exempt bonds and tax-exempt notes. The fund benchmarks the performance of its portfolio against Barclays Municipal Bond Index. MFS Municipal Income Trust was founded in November 25, 1986 and and is domiciled in United States.

Apollo Investment Company Profile

Apollo Investment Corporation is business development company specializing in middle market companies. It provides direct equity capital, mezzanine 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 warrants, makes equity co-investments, and may also 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 and credit-linked notes. The fund typically invests in building materials, business services, cable television, chemicals, consumer products, direct marketing, distribution, energy and utilities, financial services, healthcare, manufacturing, media, publishing, retail and transportation. It primarily invests between $20 million and $250 million in its portfolio companies. The fund seeks to make investments with stated maturities of five to 10 years.

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