Critical Review: Donnelley Financial Solutions (NYSE:DFIN) versus HCM Acquisition (NASDAQ:HCMA)

HCM Acquisition (NASDAQ:HCMA) and Donnelley Financial Solutions (NYSE:DFIN) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their profitability, valuation, risk, earnings, dividends, analyst recommendations and institutional ownership.

Valuation and Earnings

This table compares HCM Acquisition and Donnelley Financial Solutions”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
HCM Acquisition	N/A	N/A	N/A	N/A	N/A
Donnelley Financial Solutions	$777.50 million	1.49	$32.40 million	$1.45	32.60

Donnelley Financial Solutions has higher revenue and earnings than HCM Acquisition.

Profitability

This table compares HCM Acquisition and Donnelley Financial Solutions’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
HCM Acquisition	N/A	N/A	N/A
Donnelley Financial Solutions	4.53%	25.82%	12.29%

Risk and Volatility

HCM Acquisition has a beta of -0.27, suggesting that its stock price is 127% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 0.71, suggesting that its stock price is 29% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of current ratings and target prices for HCM Acquisition and Donnelley Financial Solutions, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
HCM Acquisition	1	0	0	0	1.00
Donnelley Financial Solutions	0	2	2	1	2.80

Donnelley Financial Solutions has a consensus target price of $61.00, indicating a potential upside of 29.05%. Given Donnelley Financial Solutions’ stronger consensus rating and higher probable upside, analysts clearly believe Donnelley Financial Solutions is more favorable than HCM Acquisition.

Insider & Institutional Ownership

11.8% of HCM Acquisition shares are owned by institutional investors. Comparatively, 93.8% of Donnelley Financial Solutions shares are owned by institutional investors. 71.2% of HCM Acquisition shares are owned by insiders. Comparatively, 5.2% of Donnelley Financial Solutions shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Summary

Donnelley Financial Solutions beats HCM Acquisition on 10 of the 11 factors compared between the two stocks.

About HCM Acquisition

HCM Acquisition Corp does not have significant operations. The company focuses on effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses or entities. HCM Acquisition Corp was incorporated in 2021 and is based in Stamford, Connecticut.

About Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. provides innovative software and technology-enabled financial regulatory and compliance solutions in the United States, Asia, Europe, Canada, and internationally. It operates through four segments: Capital Markets Software Solutions (CM-SS); Capital Markets Compliance and Communications Management (CM-CCM); Investment Companies Software Solutions (IC-SS); and Investment Companies Compliance and Communications Management (IC-CCM). The CM-SS segment provides Venue and ActiveDisclosure solutions to public and private companies to manage public and private transactional and compliance processes; collaborate; and tag, validate, and file SEC documents. The CM-CCM segment offers tech-enabled services and print and distribution solutions to public and private companies for deal solutions and SEC compliance requirements. The IC-SS segment provides clients with the Arc Suite platform that contains a comprehensive suite of cloud-based solutions, including ArcDigital, ArcReporting, ArcPro, and ArcRegulatory, as well as services that enable storage and management of compliance and regulatory information in a self-service and central repository for accessing, assembling, editing, translating, rendering, and submitting documents to regulators and investors. The IC-CCM segment offers tech-enabled solutions for creating, filing and distributing regulatory communications, and solutions for investor communications, as well as XBRL and iXBRL-formatted filings pursuant for Investment Company Act through the SEC’s EDGAR system. This segment also provides turnkey proxy services, including discovery, planning and implementation, print and mail management, solicitation, tabulation services, stockholder meeting review, and expert support. Donnelley Financial Solutions, Inc. was founded in 1983 and is headquartered in Chicago, Illinois.