New Mountain Finance (NASDAQ:NMFC – Get Free Report) and Oxford Square Capital (NASDAQ:OXSQ – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two businesses based on the strength of their analyst recommendations, valuation, earnings, dividends, institutional ownership, risk and profitability.
Institutional & Insider Ownership
32.1% of New Mountain Finance shares are owned by institutional investors. Comparatively, 6.4% of Oxford Square Capital shares are owned by institutional investors. 11.7% of New Mountain Finance shares are owned by insiders. Comparatively, 8.6% of Oxford Square Capital shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Earnings and Valuation
This table compares New Mountain Finance and Oxford Square Capital”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| New Mountain Finance | $14.84 million | 55.81 | $16.49 million | $0.15 | 53.53 |
| Oxford Square Capital | $40.34 million | 3.93 | -$18.73 million | ($0.26) | -6.96 |
New Mountain Finance has higher earnings, but lower revenue than Oxford Square Capital. Oxford Square Capital is trading at a lower price-to-earnings ratio than New Mountain Finance, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares New Mountain Finance and Oxford Square Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| New Mountain Finance | 5.04% | 10.66% | 4.41% |
| Oxford Square Capital | -46.44% | 14.80% | 7.65% |
Analyst Recommendations
This is a breakdown of recent ratings for New Mountain Finance and Oxford Square Capital, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New Mountain Finance | 2 | 5 | 0 | 0 | 1.71 |
| Oxford Square Capital | 1 | 0 | 0 | 0 | 1.00 |
New Mountain Finance presently has a consensus target price of $9.25, indicating a potential upside of 15.19%. Given New Mountain Finance’s stronger consensus rating and higher possible upside, research analysts clearly believe New Mountain Finance is more favorable than Oxford Square Capital.
Dividends
New Mountain Finance pays an annual dividend of $1.28 per share and has a dividend yield of 15.9%. Oxford Square Capital pays an annual dividend of $0.42 per share and has a dividend yield of 23.2%. New Mountain Finance pays out 853.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Oxford Square Capital pays out -161.5% of its earnings in the form of a dividend. Oxford Square Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
Risk and Volatility
New Mountain Finance has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500. Comparatively, Oxford Square Capital has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500.
Summary
New Mountain Finance beats Oxford Square Capital on 10 of the 15 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 Oxford Square Capital
Oxford Square Capital Corp. is a business development company, operates as a closed-end, non-diversified management investment company. It is a private equity and mezzanine firm. The firm invests in both public and private companies. It invests in secured and unsecured senior debt, subordinated debt, junior subordinated debt, preferred stock, common stock and syndicated bank loans. The firm primarily invests in debt and/or equity securities of technology-related companies that operate in the computer software, Internet, information technology infrastructure and services, media, telecommunications and telecommunications equipment, semiconductors, hardware, technology-enabled services, semiconductor capital equipment, medical device technology, diversified technology, and networking systems sectors. It concentrates its investments in companies having annual revenues of less than $200 million and a market capitalization or enterprise value of less than $300 million. The firm invests between $5 million and $30 million per transaction. It seeks to exit its investments within 7 years. It serves as the investment adviser to TICC. Oxford Square Capital Corp., formerly known as TICC Capital Corp., was founded in 2003 and is headquartered in Greenwich, Connecticut.
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