New Mountain Finance (NASDAQ:NMFC – Get Free Report) and GCM Grosvenor (NASDAQ:GCMG – Get Free Report) are both finance companies, but which is the better business? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, dividends, analyst recommendations, risk and valuation.
Profitability
This table compares New Mountain Finance and GCM Grosvenor’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| New Mountain Finance | -16.78% | 10.94% | 4.58% |
| GCM Grosvenor | 7.79% | 142.74% | 18.73% |
Analyst Ratings
This is a summary of recent ratings and target prices for New Mountain Finance and GCM Grosvenor, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New Mountain Finance | 1 | 4 | 0 | 0 | 1.80 |
| GCM Grosvenor | 0 | 1 | 4 | 0 | 2.80 |
Institutional & Insider Ownership
32.1% of New Mountain Finance shares are owned by institutional investors. Comparatively, 100.0% of GCM Grosvenor shares are owned by institutional investors. 14.9% of New Mountain Finance shares are owned by insiders. Comparatively, 70.7% of GCM Grosvenor shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.
Earnings & Valuation
This table compares New Mountain Finance and GCM Grosvenor”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| New Mountain Finance | $327.08 million | 2.02 | $16.49 million | ($0.47) | -14.87 |
| GCM Grosvenor | $557.57 million | 4.61 | $45.37 million | $0.52 | 24.38 |
GCM Grosvenor has higher revenue and earnings than New Mountain Finance. New Mountain Finance is trading at a lower price-to-earnings ratio than GCM Grosvenor, indicating that it is currently the more affordable of the two stocks.
Risk and Volatility
New Mountain Finance has a beta of 0.57, meaning that its share price is 43% less volatile than the S&P 500. Comparatively, GCM Grosvenor has a beta of 0.83, meaning that its share price is 17% less volatile than the S&P 500.
Dividends
New Mountain Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.3%. GCM Grosvenor pays an annual dividend of $0.48 per share and has a dividend yield of 3.8%. New Mountain Finance pays out -212.8% of its earnings in the form of a dividend. GCM Grosvenor pays out 92.3% 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.
Summary
GCM Grosvenor beats New Mountain Finance on 14 of the 16 factors compared between the two stocks.
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.
About GCM Grosvenor
GCM Grosvenor Inc. is global alternative asset management solutions provider. The firm primarily provides its services to pooled investment vehicles. It also provides its services to investment companies, high net worth individuals, pension and profit sharing plans and state or municipal government entities. The firm invests in equity and alternative investment markets of the United States and internationally. The firm invests in multi-strategy, credit-focused, equity-focused, macro-focused, commodity-focused, and other specialty portfolios. It focuses in hedge fund asset classes, private equity, real estate, and/or infrastructure, credit and absolute return strategies. It also focuses in primary fund investments, secondary fund investments, and co-investments with a focus on buyout, distressed debt, mezzanine, venture capital/growth equity investments. The firm seeks to do seed investments in small, emerging, and diverse private equity firms. The firm seeks to make regionally-focused investments in middle-market buyout. It prefers to invest in aerospace and defense, advanced electronics, information technology, biosciences, and advanced materials. It focuses on Ohio and the Midwest region. The firm employs fundamental and quantitative analysis. GCM Grosvenor Inc. was founded in 1971 and is based in Chicago, Illinois with additional offices in North America, Asia, Australia and Europe.
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