Contrasting New Mountain Finance (NMFC) and Elron Electronic Industries (ELRNF)

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New Mountain Finance (NYSE:NMFC) and Elron Electronic Industries (OTCMKTS:ELRNF) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their earnings, institutional ownership, profitability, analyst recommendations, risk, valuation and dividends.

Profitability

This table compares New Mountain Finance and Elron Electronic Industries’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
New Mountain Finance 45.47% 10.18% 4.82%
Elron Electronic Industries N/A -9.75% -9.06%

Analyst Ratings

This is a summary of current recommendations for New Mountain Finance and Elron Electronic Industries, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
New Mountain Finance 0 1 1 0 2.50
Elron Electronic Industries 0 0 0 0 N/A

New Mountain Finance currently has a consensus target price of $14.50, indicating a potential upside of 6.38%. Given New Mountain Finance’s higher possible upside, equities analysts clearly believe New Mountain Finance is more favorable than Elron Electronic Industries.

Institutional & Insider Ownership

36.2% of New Mountain Finance shares are owned by institutional investors. 10.3% of New Mountain Finance shares are owned by company 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.

Risk and Volatility

New Mountain Finance has a beta of 0.53, suggesting that its stock price is 47% less volatile than the S&P 500. Comparatively, Elron Electronic Industries has a beta of 0.3, suggesting that its stock price is 70% less volatile than the S&P 500.

Earnings and Valuation

This table compares New Mountain Finance and Elron Electronic Industries’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
New Mountain Finance $197.81 million 5.24 $109.39 million $1.29 10.57
Elron Electronic Industries $11.97 million 5.84 -$25.48 million N/A N/A

New Mountain Finance has higher revenue and earnings than Elron Electronic Industries.

Dividends

New Mountain Finance pays an annual dividend of $1.36 per share and has a dividend yield of 10.0%. Elron Electronic Industries does not pay a dividend. New Mountain Finance pays out 105.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

New Mountain Finance beats Elron Electronic Industries on 11 of the 13 factors compared between the two stocks.

About New Mountain Finance

New Mountain Finance Corporation is a Business Development Company specializing in investments in middle market companies and debt securities at various levels of the capital structure, including first and second lien debt, unsecured notes, bonds, and mezzanine securities. It invests in various industries that include software, education, business services, distribution and logistics, federal services, healthcare services and products, healthcare facilities, energy, media, consumer and industrial services, healthcare Information Technology, Information Technology and services, specialty chemicals and materials, telecommunication, retail, and power generation. It seeks to invest in United States. It typically invests between $10 million and $50 million. Within middle market it seeks to invest in companies having EBITDA between $20 million and $200 million. It prefers to invest in equity interests, such as preferred stock, common stock, warrants, or options received in connection with its debt investments and directly in the equity of private companies. The fund makes investments through both primary originations and open-market secondary purchases. It invests primarily in debt securities that are rated below investment grade and have contractual unlevered returns of 10% to 15%. The firm may also invest in distressed debt and related opportunities and prefers to invest in targets having private equity sponsorship. It seeks to hold its investments between five years and ten years. The fund prefer to have majority stake in companies.

About Elron Electronic Industries

Elron Electronic Industries Ltd., through its subsidiaries, provides technology products in the medical devices and cyber fields. The company offers BrainsGate, a minimally invasive treatment for ischemic stroke; Pocared, an automated microbiology lab system for infectious diseases diagnosis; CartiHeal implants for cartilage and bone repair in weight bearing joints; Notal Vision, a remote monitoring of patients at risk of vision loss from age-related macular degeneration; cyber intelligence platform that detects and defuses threats before they become cyberattacks; Alcide, a security and management tools for hybrid data centers; and SecuredTouch a behavioral biometrics for mobile transactions. It also provides Ironscales, an automated phishing prevention, detection, and response platform; Cynerio, a connected medical device; Kindite, a cloud encryption solution; OpenLegacy, a platform that enables the digital transformation process; PLYmedia, a platform for ad networks; Aqwise, a biological water and wastewater treatment solutions for the industrial and municipal markets; and Atlantium, a water disinfection solution. The company was founded in 1961 and is based in Tel Aviv, Israel. Elron Electronic Industries Ltd. is a subsidiary of Discount Investment Corporation Limited.

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