Monroe Capital (NASDAQ:MRCC – Get Rating) and Hennessy Advisors (NASDAQ:HNNA – Get Rating) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, dividends, institutional ownership, valuation, analyst recommendations, profitability and earnings.
Earnings & Valuation
This table compares Monroe Capital and Hennessy Advisors’ gross revenue, earnings per share and valuation.
Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
Monroe Capital | $53.83 million | 3.66 | $32.46 million | $1.23 | 7.39 |
Hennessy Advisors | $32.76 million | 2.38 | $7.90 million | $1.02 | 10.22 |
Monroe Capital has higher revenue and earnings than Hennessy Advisors. Monroe Capital is trading at a lower price-to-earnings ratio than Hennessy Advisors, indicating that it is currently the more affordable of the two stocks.
Analyst Recommendations
This is a summary of recent recommendations and price targets for Monroe Capital and Hennessy Advisors, as reported by MarketBeat.com.
Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
Monroe Capital | 0 | 0 | 1 | 0 | 3.00 |
Hennessy Advisors | 0 | 0 | 0 | 0 | N/A |
Monroe Capital currently has a consensus target price of $10.50, suggesting a potential upside of 15.51%. Given Monroe Capital’s higher possible upside, equities analysts plainly believe Monroe Capital is more favorable than Hennessy Advisors.
Insider & Institutional Ownership
19.1% of Monroe Capital shares are owned by institutional investors. Comparatively, 7.7% of Hennessy Advisors shares are owned by institutional investors. 3.5% of Monroe Capital shares are owned by insiders. Comparatively, 41.3% of Hennessy Advisors shares are owned by 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.
Risk & Volatility
Monroe Capital has a beta of 1.21, suggesting that its share price is 21% more volatile than the S&P 500. Comparatively, Hennessy Advisors has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.
Profitability
This table compares Monroe Capital and Hennessy Advisors’ net margins, return on equity and return on assets.
Net Margins | Return on Equity | Return on Assets | |
Monroe Capital | 49.43% | 9.13% | 3.87% |
Hennessy Advisors | 23.29% | 9.25% | 6.42% |
Dividends
Monroe Capital pays an annual dividend of $1.00 per share and has a dividend yield of 11.0%. Hennessy Advisors pays an annual dividend of $0.55 per share and has a dividend yield of 5.3%. Monroe Capital pays out 81.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Hennessy Advisors pays out 53.9% of its earnings in the form of a dividend.
Summary
Monroe Capital beats Hennessy Advisors on 10 of the 15 factors compared between the two stocks.
About Monroe Capital
Monroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.
About Hennessy Advisors
Hennessy Advisors, Inc. is publicly owned investment manager. It provides its services to Hennessy Funds and investment companies. The firm launches and manages equity, fixed income, and balanced mutual funds. It invests in the public equity and fixed income markets across the globe. The firm primarily invests in growth stocks of companies. It conducts in-house research to make its investments. Hennessy Advisors, Inc. was founded in 1989 and is based in Novato, California with additional offices in Boston, Massachusetts and Chapel Hill, North Carolina.
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Read More: Monroe Capital (NASDAQ:MRCC) vs. Hennessy Advisors (NASDAQ:HNNA) Head-To-Head Comparison