Analyzing Moody’s (NYSE:MCO) and MidCap Financial Investment (NASDAQ:MFIC)

Moody’s (NYSE:MCO) and MidCap Financial Investment (NASDAQ:MFIC) are both finance companies, but which is the superior stock? We will contrast the two companies based on the strength of their profitability, earnings, valuation, institutional ownership, analyst recommendations, dividends and risk.

Institutional and Insider Ownership

92.1% of Moody’s shares are held by institutional investors. Comparatively, 28.5% of MidCap Financial Investment shares are held by institutional investors. 0.1% of Moody’s shares are held by insiders. Comparatively, 0.8% of MidCap Financial Investment 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.

Valuation & Earnings

This table compares Moody’s and MidCap Financial Investment”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moody’s	$7.09 billion	11.89	$2.06 billion	$11.77	39.99
MidCap Financial Investment	$301.78 million	3.61	$98.82 million	$1.08	10.81

Moody’s has higher revenue and earnings than MidCap Financial Investment. MidCap Financial Investment is trading at a lower price-to-earnings ratio than Moody’s, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a breakdown of recent ratings for Moody’s and MidCap Financial Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moody’s	0	6	12	1	2.74
MidCap Financial Investment	0	4	3	0	2.43

Moody’s presently has a consensus price target of $542.87, suggesting a potential upside of 15.33%. MidCap Financial Investment has a consensus price target of $13.42, suggesting a potential upside of 14.87%. Given Moody’s’ stronger consensus rating and higher probable upside, equities analysts plainly believe Moody’s is more favorable than MidCap Financial Investment.

Volatility & Risk

Moody’s has a beta of 1.41, meaning that its share price is 41% more volatile than the S&P 500. Comparatively, MidCap Financial Investment has a beta of 1.03, meaning that its share price is 3% more volatile than the S&P 500.

Profitability

This table compares Moody’s and MidCap Financial Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moody’s	29.18%	60.73%	15.47%
MidCap Financial Investment	30.60%	10.44%	4.41%

Dividends

Moody’s pays an annual dividend of $3.76 per share and has a dividend yield of 0.8%. MidCap Financial Investment pays an annual dividend of $1.52 per share and has a dividend yield of 13.0%. Moody’s pays out 31.9% of its earnings in the form of a dividend. MidCap Financial Investment pays out 140.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Moody’s has increased its dividend for 16 consecutive years.

Summary

Moody’s beats MidCap Financial Investment on 15 of the 18 factors compared between the two stocks.

About Moody’s

Moody’s Corporation operates as an integrated risk assessment firm worldwide. It operates in two segments, Moody’s Analytics and Moody’s Investors Services. The Moody’s Analytics segment develops a range of products and services that support the risk management activities of institutional participants in financial markets. It also offers credit research, credit models and analytics, economics data and models, and structured finance solutions; data sets on companies and securities; and SaaS solutions supporting banking, insurance, and know your customer workflows. The Moody’s Investors Service segment publishes credit ratings and provides assessment services on various debt obligations, programs and facilities, and entities that issue such obligations, such as various corporate, financial institution, and governmental obligations, as well as structured finance securities. The company was formerly known as Dun and Bradstreet Company and changed its name to Moody’s Corporation in September 2000. Moody’s Corporation was founded in 1900 and is headquartered in New York, New York.

About MidCap Financial Investment

MidCap Financial Investment Corporation (Former name Apollo Investment Corporation) is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies and EBITDA with less than $75 million. The fund seeks to make investments with stated maturities of five to 10 years.