Monroe Capital Corporation (NASDAQ: MRCC) and Federal Agricultural Mortgage Corporation (NYSE:AGM) are both small-cap finance companies, but which is the better investment? We will compare the two companies based on the strength of their analyst recommendations, risk, dividends, valuation, earnings, institutional ownership and profitabiliy.
This is a summary of recent ratings for Monroe Capital Corporation and Federal Agricultural Mortgage Corporation, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Monroe Capital Corporation||0||2||4||0||2.67|
|Federal Agricultural Mortgage Corporation||0||1||0||0||2.00|
Monroe Capital Corporation currently has a consensus price target of $17.13, indicating a potential upside of 13.19%. Federal Agricultural Mortgage Corporation has a consensus price target of $65.00, indicating a potential downside of 4.98%. Given Monroe Capital Corporation’s stronger consensus rating and higher possible upside, analysts clearly believe Monroe Capital Corporation is more favorable than Federal Agricultural Mortgage Corporation.
Volatility & Risk
Monroe Capital Corporation has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500. Comparatively, Federal Agricultural Mortgage Corporation has a beta of 1.15, indicating that its share price is 15% more volatile than the S&P 500.
Earnings and Valuation
This table compares Monroe Capital Corporation and Federal Agricultural Mortgage Corporation’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Monroe Capital Corporation||N/A||N/A||N/A||$1.24||12.20|
|Federal Agricultural Mortgage Corporation||$172.28 million||4.21||$71.85 million||$6.78||10.09|
Federal Agricultural Mortgage Corporation has higher revenue and earnings than Monroe Capital Corporation. Federal Agricultural Mortgage Corporation is trading at a lower price-to-earnings ratio than Monroe Capital Corporation, indicating that it is currently the more affordable of the two stocks.
Institutional & Insider Ownership
27.6% of Monroe Capital Corporation shares are owned by institutional investors. Comparatively, 63.5% of Federal Agricultural Mortgage Corporation shares are owned by institutional investors. 1.9% of Monroe Capital Corporation shares are owned by company insiders. Comparatively, 3.8% of Federal Agricultural Mortgage Corporation shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.
Monroe Capital Corporation pays an annual dividend of $1.40 per share and has a dividend yield of 9.3%. Federal Agricultural Mortgage Corporation pays an annual dividend of $1.44 per share and has a dividend yield of 2.1%. Monroe Capital Corporation pays out 112.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Federal Agricultural Mortgage Corporation pays out 21.2% of its earnings in the form of a dividend. Monroe Capital Corporation has increased its dividend for 5 consecutive years. Monroe Capital Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
This table compares Monroe Capital Corporation and Federal Agricultural Mortgage Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Monroe Capital Corporation||41.75%||10.23%||5.77%|
|Federal Agricultural Mortgage Corporation||24.15%||15.17%||0.40%|
Federal Agricultural Mortgage Corporation beats Monroe Capital Corporation on 8 of the 15 factors compared between the two stocks.
About Monroe Capital Corporation
Monroe Capital Corporation is a closed-end, non-diversified management investment company. The Company is a specialty finance company focused on providing financing primarily to lower middle-market companies in the United States and Canada. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation primarily through investments in senior, unitranche and junior secured debt, and unsecured subordinated debt and equity. The Company provides customized financing solutions focused primarily on senior secured, junior secured and unitranche (a combination of senior secured and junior secured debt in the same facility) debt, and subordinated debt and equity, including equity co-investments in preferred and common stock and warrants. The Company’s investment activities are managed by its investment advisor, Monroe Capital BDC Advisors, LLC (MC Advisors).
About Federal Agricultural Mortgage Corporation
Federal Agricultural Mortgage Corporation (Farmer Mac) provides a secondary market for a range of loans made to borrowers in rural America. The Company’s segments include Farm & Ranch, USDA Guarantees, Rural Utilities, Institutional Credit and Corporate. Its secondary market activities are purchasing eligible loans directly from lenders; providing advances against eligible loans by purchasing obligations secured by those loans; securitizing assets and guaranteeing the payment of principal and interest on the resulting securities that represent interests in, or obligations secured by, pools of eligible loans; and issuing long-term standby purchase commitments (LTSPCs) for eligible loans. The loans eligible for the secondary market provided by Farmer Mac include mortgage loans secured by first liens on agricultural real estate, including part-time farms and rural housing (comprising the assets eligible for the Farm & Ranch line of business).
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