New Mountain Finance Corporation (NYSE: NMFC) and MFS Charter Income Trust (NYSE:MCR) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their analyst recommendations, institutional ownership, dividends, risk, valuation, profitability and earnings.

Profitability

This table compares New Mountain Finance Corporation and MFS Charter Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New Mountain Finance Corporation 65.22% 10.15% 5.38%
MFS Charter Income Trust N/A N/A N/A

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for New Mountain Finance Corporation and MFS Charter Income Trust, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Mountain Finance Corporation 0 1 0 0 2.00
MFS Charter Income Trust 0 0 0 0 N/A

New Mountain Finance Corporation presently has a consensus price target of $15.00, suggesting a potential upside of 5.26%. Given New Mountain Finance Corporation’s higher possible upside, research analysts plainly believe New Mountain Finance Corporation is more favorable than MFS Charter Income Trust.

Dividends

New Mountain Finance Corporation pays an annual dividend of $1.36 per share and has a dividend yield of 9.5%. MFS Charter Income Trust does not pay a dividend. New Mountain Finance Corporation pays out 86.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Insider & Institutional Ownership

40.7% of New Mountain Finance Corporation shares are owned by institutional investors. 9.7% of New Mountain Finance Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Valuation and Earnings

This table compares New Mountain Finance Corporation and MFS Charter Income Trust’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
New Mountain Finance Corporation N/A N/A N/A $1.57 9.08
MFS Charter Income Trust N/A N/A N/A N/A N/A

Summary

New Mountain Finance Corporation beats MFS Charter Income Trust on 7 of the 8 factors compared between the two stocks.

New Mountain Finance Corporation Company Profile

New Mountain Finance Corporation is a closed-end, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation through the sourcing and origination of debt securities at all levels of the capital structure, including first and second lien debt, notes, bonds and mezzanine securities. Its investments may also include equity interests, such as preferred stock, common stock, warrants or options received in connection with its debt investments or may include a direct investment in the equity of private companies. The Company makes investments through both primary originations and open-market secondary purchases. Its investment portfolio includes its investments in various industries, such as business services, software, consumer services, investment fund, education, energy, healthcare services, distribution and logistics, and Federal services. Its investment advisor is New Mountain Finance Advisers BDC, L.L.C.

MFS Charter Income Trust Company Profile

MFS Charter Income Trust (Fund) is a diversified closed-end management investment company. The Fund’s investment objective is to seek high current income, but may also consider capital appreciation. The Fund normally invests in debt instruments. The Fund also invests in corporate bonds of the United States and/or foreign issuers, the United States Government securities, foreign government securities, mortgage-backed and other asset-backed securities and/or debt instruments of issuers located in emerging market countries. The Fund’s portfolio comprises bonds, floating rate loans, equities, cash and cash equivalent and other. It invests in a range of Fixed income sectors, such as high yield corporates non-united states government bonds, investment grade corporates, emerging markets bonds, commercial mortgage-backed securities, asset-backed securities and collateralized debt obligations. Massachusetts Financial Services Company is the Fund’s investment advisor.

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