Critical Comparison: Moelis & Co (MC) versus Monroe Capital (MRCC)

Moelis & Co (NYSE: MC) and Monroe Capital (NASDAQ:MRCC) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, profitability, risk, institutional ownership, earnings, dividends and analyst recommendations.

Dividends

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Moelis & Co pays an annual dividend of $1.88 per share and has a dividend yield of 3.2%. Monroe Capital pays an annual dividend of $1.40 per share and has a dividend yield of 10.3%. Moelis & Co pays out 82.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Monroe Capital pays out 100.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Moelis & Co has raised its dividend for 3 consecutive years.

Earnings and Valuation

This table compares Moelis & Co and Monroe Capital’s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Moelis & Co	$684.61 million	4.81	$29.40 million	$2.29	25.76
Monroe Capital	$51.11 million	5.36	$12.15 million	$1.40	9.66

Moelis & Co has higher revenue and earnings than Monroe Capital. Monroe Capital is trading at a lower price-to-earnings ratio than Moelis & Co, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Moelis & Co and Monroe Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Moelis & Co	6.49%	50.44%	23.16%
Monroe Capital	20.30%	10.16%	5.89%

Institutional & Insider Ownership

66.6% of Moelis & Co shares are owned by institutional investors. Comparatively, 26.3% of Monroe Capital shares are owned by institutional investors. 29.9% of Moelis & Co shares are owned by company insiders. Comparatively, 1.9% of Monroe Capital shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock is poised for long-term growth.

Analyst Recommendations

This is a summary of current ratings and target prices for Moelis & Co and Monroe Capital, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Moelis & Co	0	2	3	0	2.60
Monroe Capital	0	1	2	0	2.67

Moelis & Co presently has a consensus target price of $57.80, suggesting a potential downside of 2.03%. Monroe Capital has a consensus target price of $15.50, suggesting a potential upside of 14.56%. Given Monroe Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Monroe Capital is more favorable than Moelis & Co.

Volatility and Risk

Moelis & Co has a beta of 1.73, suggesting that its share price is 73% more volatile than the S&P 500. Comparatively, Monroe Capital has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500.

Summary

Moelis & Co beats Monroe Capital on 12 of the 17 factors compared between the two stocks.

About Moelis & Co

Moelis & Company, an investment bank, provides strategic and financial advisory services in the United States and internationally. It advises clients in the areas of mergers and acquisitions, recapitalizations and restructurings, capital markets advisory, and other corporate finance matters. The company offers its services to public multinational corporations, governments, financial sponsors, middle market private companies, and individual entrepreneurs. It has strategic alliances with Sumitomo Mitsui Banking Corporation and SMBC Nikko Securities Inc.; and Alfaro, D谩vila y R铆os, S.C. Moelis & Company was founded in 2007 and is headquartered in New York, New York.

About Monroe Capital

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).

An $80,000 BMW for $100,000

The Trump administration tariff on import cars could push the price of a well-outfitted BMW 5 Series from $80,000 to $100,000, depending on where the car is assembled and where the parts are made and shipped from.

BMW has to hope, probably in vain, that its brand image will keep the buyer for this car instead of that buyer deciding to turn to a Cadillac. Some may not, if they want to own “The Ultimate Driving Machine.”

So the pivot of people to Cadillacs could help General Motors Co. (NYSE: GM), which has struggled mightily to sell its embattled luxury brand��s models. Cadillac dealers will get richer.

Economic theories sometimes argue that the coffee shop next to the Cadillac dealer will get some walk in business. The Cadillac dealer will even get another swipe at customers when they bring cars in for service.� However, the benefits mostly end with the sale of that cup of coffee.

The Cadillac buyer may be a farmer, though probably not since farmers are not a huge number of luxury car buyers, when tariffs hit agricultural commodity prices. Or, the potential buyer could be a small manufacturer who relies on German parts. (In a trade war, more than cars will be hit with tariffs.) Suddenly, the luxury car pool of buyers make be drained, if only ever so slightly. The rosy future for the Cadillac dealer looks a bit less healthy.

The tariff on German cars hurts BMW.� It is not guaranteed that it helps someone else.

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