Portman Ridge Finance (NASDAQ:PTMN) and CM Finance (NASDAQ:CMFN) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their dividends, profitability, risk, valuation, institutional ownership, analyst recommendations and earnings.
Portman Ridge Finance pays an annual dividend of $0.24 per share and has a dividend yield of 10.2%. CM Finance pays an annual dividend of $1.00 per share and has a dividend yield of 13.6%. Portman Ridge Finance pays out 88.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. CM Finance pays out 71.9% of its earnings in the form of a dividend. CM Finance is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Portman Ridge Finance and CM Finance’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Portman Ridge Finance||-108.42%||2.08%||1.01%|
Insider & Institutional Ownership
28.6% of Portman Ridge Finance shares are held by institutional investors. Comparatively, 44.5% of CM Finance shares are held by institutional investors. 6.3% of Portman Ridge Finance shares are held by company insiders. Comparatively, 1.9% of CM Finance shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
Earnings & Valuation
This table compares Portman Ridge Finance and CM Finance’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Portman Ridge Finance||$27.09 million||3.26||-$9.57 million||$0.27||8.74|
|CM Finance||$40.79 million||2.45||$15.62 million||$1.39||5.29|
CM Finance has higher revenue and earnings than Portman Ridge Finance. CM Finance is trading at a lower price-to-earnings ratio than Portman Ridge Finance, indicating that it is currently the more affordable of the two stocks.
This is a summary of current recommendations and price targets for Portman Ridge Finance and CM Finance, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Portman Ridge Finance||0||0||1||0||3.00|
Risk & Volatility
Portman Ridge Finance has a beta of 0.68, suggesting that its stock price is 32% less volatile than the S&P 500. Comparatively, CM Finance has a beta of 1.29, suggesting that its stock price is 29% more volatile than the S&P 500.
CM Finance beats Portman Ridge Finance on 11 of the 14 factors compared between the two stocks.
About Portman Ridge Finance
Portman Ridge Finance Corp. is a private equity fund and non-diversified closed-end investment company that invests in middle market companies generating consistent cash flows located in North America. It targets companies operating across a broad range of sectors such as aerospace and defense, automotive, beverage, food and tobacco, broadcasting and entertainment, buildings and real estate, personal and cargo transport, chemicals, plastics and rubber, containers, packaging and glass, diversified or conglomerate service, ecological, electronics, finance, and healthcare. The company was founded on August 8, 2006 and is headquartered in New York, NY.
About CM Finance
CM Finance Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, and recapitalization investments. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest in companies with EBITDA more than $15 million. The fund is based in New York, New York.
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