New Mountain Finance (NASDAQ:NMFC – Get Free Report) and MarketWise (NASDAQ:MKTW – Get Free Report) are both small-cap finance companies, but which is the better business? We will contrast the two companies based on the strength of their risk, institutional ownership, earnings, dividends, valuation, analyst recommendations and profitability.
Profitability
This table compares New Mountain Finance and MarketWise’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% |
| MarketWise | 0.70% | -0.96% | 1.10% |
Analyst Ratings
This is a breakdown of current ratings and recommmendations for New Mountain Finance and MarketWise, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| New Mountain Finance | 1 | 4 | 0 | 0 | 1.80 |
| MarketWise | 0 | 1 | 1 | 0 | 2.50 |
Dividends
New Mountain Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.9%. MarketWise pays an annual dividend of $1.00 per share and has a dividend yield of 5.2%. New Mountain Finance pays out -212.8% of its earnings in the form of a dividend. MarketWise pays out 113.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. MarketWise has increased its dividend for 1 consecutive years. New Mountain Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
Volatility and Risk
New Mountain Finance has a beta of 0.6, suggesting that its stock price is 40% less volatile than the S&P 500. Comparatively, MarketWise has a beta of 0.21, suggesting that its stock price is 79% less volatile than the S&P 500.
Earnings and Valuation
This table compares New Mountain Finance and MarketWise”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 | 1.94 | $16.49 million | ($0.47) | -14.32 |
| MarketWise | $328.12 million | 0.93 | $5.62 million | $0.88 | 21.88 |
New Mountain Finance has higher earnings, but lower revenue than MarketWise. New Mountain Finance is trading at a lower price-to-earnings ratio than MarketWise, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
32.1% of New Mountain Finance shares are held by institutional investors. Comparatively, 23.0% of MarketWise shares are held by institutional investors. 14.9% of New Mountain Finance shares are held by insiders. Comparatively, 29.9% of MarketWise shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
New Mountain Finance beats MarketWise on 9 of the 17 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 MarketWise
MarketWise, Inc. operates a content and technology multi-brand platform for self-directed investors in the United States and Internationally. Its platform includes subscription businesses that provides financial research, software, education, and tools to navigate the financial markets. The company offers various investment strategies, such as value investing, income, growth, commodities, cryptocurrencies, venture, crowdfunded investing, biotechnology, mutual funds, options, and trading; investment research product portfolio through a range of media, including desktops, laptops, tablets, and mobile; and financial newsletters. It provides a suite of stock research tools and portfolio management services under the Chaikin Analytics brand; portfolio management software tools under the TradeSmith brand name; and database of accounting-based financial summaries under the Altimetry brand. In addition, the company develops screeners, monitors, portfolio management tools, and proprietary indicators that produce a composite score to rank publicly traded companies. The company was founded in 1999 and is headquartered in Baltimore, Maryland.
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