Federal Agricultural Mortgage Corporation (NYSE: AGM) and Monroe Capital Corporation (NASDAQ:MRCC) are both finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, risk, analyst recommendations, institutional ownership, profitabiliy, valuation and earnings.

Insider & Institutional Ownership

63.4% of Federal Agricultural Mortgage Corporation shares are held by institutional investors. Comparatively, 27.6% of Monroe Capital Corporation shares are held by institutional investors. 3.8% of Federal Agricultural Mortgage Corporation shares are held by company insiders. Comparatively, 1.9% of Monroe Capital Corporation shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares Federal Agricultural Mortgage Corporation and Monroe Capital Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Federal Agricultural Mortgage Corporation $172.28 million 4.16 $71.85 million $6.78 9.99
Monroe Capital Corporation N/A N/A N/A $1.24 11.90

Federal Agricultural Mortgage Corporation has higher revenue and earnings than Monroe Capital Corporation. Federal Agricultural Mortgage Corporation is trading at a lower price-to-earnings ratio than Monroe Capital Corporation, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Federal Agricultural Mortgage Corporation and Monroe Capital Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Federal Agricultural Mortgage Corporation 24.15% 15.17% 0.40%
Monroe Capital Corporation 41.75% 10.23% 5.77%

Dividends

Federal Agricultural Mortgage Corporation pays an annual dividend of $1.44 per share and has a dividend yield of 2.1%. Monroe Capital Corporation pays an annual dividend of $1.40 per share and has a dividend yield of 9.5%. Federal Agricultural Mortgage Corporation pays out 21.2% of its earnings in the form of a dividend. Monroe Capital Corporation pays out 112.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Agricultural Mortgage Corporation has raised its dividend for 5 consecutive years.

Volatility & Risk

Federal Agricultural Mortgage Corporation has a beta of 1.16, indicating that its stock price is 16% more volatile than the S&P 500. Comparatively, Monroe Capital Corporation has a beta of 0.55, indicating that its stock price is 45% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of current recommendations for Federal Agricultural Mortgage Corporation and Monroe Capital Corporation, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Federal Agricultural Mortgage Corporation 0 1 0 0 2.00
Monroe Capital Corporation 0 2 4 0 2.67

Federal Agricultural Mortgage Corporation currently has a consensus target price of $65.00, indicating a potential downside of 4.00%. Monroe Capital Corporation has a consensus target price of $17.13, indicating a potential upside of 16.10%. Given Monroe Capital Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Monroe Capital Corporation is more favorable than Federal Agricultural Mortgage Corporation.

Summary

Federal Agricultural Mortgage Corporation beats Monroe Capital Corporation on 8 of the 14 factors compared between the two stocks.

Federal Agricultural Mortgage Corporation Company Profile

Federal Agricultural Mortgage Corporation (Farmer Mac) provides a secondary market for a range of loans made to borrowers in rural America. The Company’s segments include Farm & Ranch, USDA Guarantees, Rural Utilities, Institutional Credit and Corporate. Its secondary market activities are purchasing eligible loans directly from lenders; providing advances against eligible loans by purchasing obligations secured by those loans; securitizing assets and guaranteeing the payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of eligible loans; and issuing long-term standby purchase commitments (LTSPCs) for eligible loans. The loans eligible for the secondary market provided by Farmer Mac include mortgage loans secured by first liens on agricultural real estate, including part-time farms and rural housing (comprising the assets eligible for the Farm & Ranch line of business).

Monroe Capital Corporation Company Profile

Monroe Capital Corporation is a closed-end, non-diversified management investment company. The Company is a specialty finance company focused on providing financing primarily to lower middle-market companies in the United States and Canada. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation primarily through investments in senior, unitranche and junior secured debt, and unsecured subordinated debt and equity. The Company provides customized financing solutions focused primarily on senior secured, junior secured and unitranche (a combination of senior secured and junior secured debt in the same facility) debt, and subordinated debt and equity, including equity co-investments in preferred and common stock and warrants. The Company’s investment activities are managed by its investment advisor, Monroe Capital BDC Advisors, LLC (MC Advisors).

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