CM Finance (NASDAQ: CMFN) and TRIPLEPOINT VEN/COM (NYSE:TPVG) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their institutional ownership, dividends, earnings, risk, valuation, profitability and analyst recommendations.
Earnings & Valuation
This table compares CM Finance and TRIPLEPOINT VEN/COM’s top-line revenue, earnings per share and valuation.
||Earnings Per Share
CM Finance has higher earnings, but lower revenue than TRIPLEPOINT VEN/COM. CM Finance is trading at a lower price-to-earnings ratio than TRIPLEPOINT VEN/COM, indicating that it is currently the more affordable of the two stocks.
CM Finance pays an annual dividend of $1.00 per share and has a dividend yield of 11.3%. TRIPLEPOINT VEN/COM pays an annual dividend of $1.44 per share and has a dividend yield of 11.5%. CM Finance pays out 87.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TRIPLEPOINT VEN/COM pays out 89.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Risk and Volatility
CM Finance has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, TRIPLEPOINT VEN/COM has a beta of 1.21, indicating that its stock price is 21% more volatile than the S&P 500.
This is a breakdown of current ratings for CM Finance and TRIPLEPOINT VEN/COM, as reported by MarketBeat.
||Strong Buy Ratings
TRIPLEPOINT VEN/COM has a consensus target price of $14.00, indicating a potential upside of 11.55%. Given TRIPLEPOINT VEN/COM’s higher possible upside, analysts clearly believe TRIPLEPOINT VEN/COM is more favorable than CM Finance.
Institutional and Insider Ownership
50.1% of CM Finance shares are held by institutional investors. Comparatively, 39.3% of TRIPLEPOINT VEN/COM shares are held by institutional investors. 1.8% of CM Finance shares are held by insiders. Comparatively, 1.8% of TRIPLEPOINT VEN/COM shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
This table compares CM Finance and TRIPLEPOINT VEN/COM’s net margins, return on equity and return on assets.
||Return on Equity
||Return on Assets
TRIPLEPOINT VEN/COM beats CM Finance on 10 of the 14 factors compared between the two stocks.
About CM Finance
CM Finance Inc is an externally managed, non-diversified closed-end management investment company. The Company is a specialty finance company that invests primarily in the debt of the United States middle-market companies. The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing in debt and related equity of privately held lower middle-market companies. As of June 30, 2016, the Company’s portfolio consisted of debt and equity investments in 22 portfolio companies. It invests in unitranche loans and standalone second and first lien loans, with an emphasis on floating rate debt. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments.CM Investment Partners LLC is an external investment advisor of the Company.
About TRIPLEPOINT VEN/COM
TriplePoint Venture Growth BDC Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its total return to stockholders primarily in the form of current income and, to a lesser extent, capital appreciation by primarily lending with warrants to venture growth stage companies focused in technology, life sciences and other high growth industries, which are backed by TriplePoint Capital LLC’s (TPC) select group of venture capital investors. The Company targets investment opportunities in venture growth stage companies backed by venture capital investors. The Company originates and invests primarily in loans that have a secured collateral position and are used by venture growth stage companies to finance their continued expansion and growth, equipment financings and, on a select basis, revolving loans. The Company is managed by TPVG Advisers LLC.
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