Head to Head Contrast: Barings Bdc (NYSE:BBDC) versus New Mountain Finance (NASDAQ:NMFC)

New Mountain Finance (NASDAQ:NMFC) and Barings Bdc (NYSE:BBDC) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, dividends, earnings, risk, analyst recommendations, valuation and institutional ownership.

Institutional & Insider Ownership

32.1% of New Mountain Finance shares are owned by institutional investors. Comparatively, 44.1% of Barings Bdc shares are owned by institutional investors. 11.7% of New Mountain Finance shares are owned by insiders. Comparatively, 0.5% of Barings Bdc shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk and Volatility

New Mountain Finance has a beta of 0.58, meaning that its stock price is 42% less volatile than the S&P 500. Comparatively, Barings Bdc has a beta of 0.61, meaning that its stock price is 39% less volatile than the S&P 500.

Profitability

This table compares New Mountain Finance and Barings Bdc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
New Mountain Finance	20.84%	10.42%	4.34%
Barings Bdc	36.01%	10.11%	4.30%

Dividends

New Mountain Finance pays an annual dividend of $1.28 per share and has a dividend yield of 14.0%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 11.3%. New Mountain Finance pays out 196.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc pays out 107.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has increased its dividend for 3 consecutive years.

Analyst Ratings

This is a summary of current recommendations and price targets for New Mountain Finance and Barings Bdc, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
New Mountain Finance	1	6	0	0	1.86
Barings Bdc	0	2	2	0	2.50

New Mountain Finance currently has a consensus price target of $10.17, indicating a potential upside of 11.48%. Barings Bdc has a consensus price target of $9.67, indicating a potential upside of 4.73%. Given New Mountain Finance’s higher probable upside, analysts plainly believe New Mountain Finance is more favorable than Barings Bdc.

Valuation and Earnings

This table compares New Mountain Finance and Barings Bdc”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
New Mountain Finance	$72.53 million	12.97	$113.44 million	$0.65	14.03
Barings Bdc	$114.20 million	8.50	$110.29 million	$0.97	9.52

New Mountain Finance has higher earnings, but lower revenue than Barings Bdc. Barings Bdc 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.

Summary

Barings Bdc beats New Mountain Finance 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 Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.