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New Mountain Finance (NMFC)
NASDAQ:NMFC
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New Mountain Finance
(NASDAQ:NMFC)
Rating:65Neutral
Price Target:―
New Mountain Finance (NMFC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.14B
Dividend Yield12.07%
Average Volume (3M)521.76K
Price to Earnings (P/E)10.7
Beta (1Y)0.38
Revenue Growth-3.55%
EPS Growth-20.43%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength81
IndustryAsset Management
Share Statistics
EPS (TTM)0.32
Shares Outstanding107,851,420
10 Day Avg. Volume352,023
30 Day Avg. Volume521,756
Financial Highlights & Ratios
PEG Ratio-2.43
Price to Book (P/B)0.82
Price to Sales (P/S)0.00
P/FCF Ratio5.33
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$11.25Price Target Upside6.13% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
New Mountain Finance Business Overview & Revenue Model
Company DescriptionNew Mountain Finance Corporation (Nasdaq: NMFC), a business development company is a private equity / buyouts and loan fund specializes in directly investing and lending to middle market companies in defensive growth industries. The fund prefers investing in buyout and middle market companies. It also makes investments in debt securities at all levels of the capital structure including first and second lien debt, unsecured notes and mezzanine securities. In some cases, its investments may also include equity interests. It targets energy, specialty chemicals and materials, trading companies and distributors, commercial printing, diversified support services, education services, environmental and facilities services, office services and supplies, media, distributors, health care services, health care facilities, application software, business services, systems software, federal services, distribution and logistics, interactive home entertainment, telecommunication services, hydroelectric power generation, electric power generation by fossil fuels, electric power generation by nuclear fuels, health care technology, and security and alarm services. The fund seeks to invest in United States of America. It seeks to invest between $10 million and $50 million per transaction. The firm invests through both primary originations and open-market secondary purchases. It invests in companies with EBITDA between $10 million and $200 million and target investments up to a $125 million hold size. The fund seeks a majority stake in its portfolio companies.
How the Company Makes MoneyNew Mountain Finance Corporation makes money primarily through interest income generated from its debt investments in middle-market companies. The company extends loans to these businesses and earns revenue from the interest payments on these loans. Additionally, NMFC may also generate income from equity investments, including capital gains realized from the sale of these investments. The company benefits from its strategic partnerships and industry expertise, which help in sourcing attractive investment opportunities and managing investment risks effectively.
New Mountain Finance Financial Statement Overview
Summary
New Mountain Finance maintains a solid profitability profile with strong margins, but faces challenges in revenue growth and cash flow generation. The balance sheet reflects moderate leverage, which is manageable but requires careful monitoring due to high debt levels. The company's ability to improve revenue and cash flow will be crucial for sustaining its financial health in the long term.Income Statement
New Mountain Finance has shown a mixed performance on its income statement. The gross profit margin remains robust at 100% due to the nature of the business, and the net profit margin has improved to 39.3% in 2024 from 36.1% in 2023. However, total revenue decreased slightly by 0.85% from 2023 to 2024, indicating potential challenges in revenue growth. The EBIT margin is strong at 98.3%, reflecting efficient cost management. The absence of EBITDA data limits a complete profitability analysis.72
Positive
Balance Sheet
The balance sheet shows a stable financial position, with an equity ratio of 41.9%, indicating moderate leverage. The debt-to-equity ratio is 0.41, which is relatively low, suggesting manageable debt levels. The return on equity increased slightly to 10.7% in 2024, reflecting improved profitability. However, the asset base has decreased slightly, and the high debt levels pose a risk in economic downturns.65
Positive
Cash Flow
Cash flow analysis reveals a concerning trend with a significant decline in operating cash flow from $332.7 million in 2023 to $42 million in 2024. The free cash flow has also declined similarly, resulting in a limited ability to generate cash from operations relative to net income. The operating cash flow to net income ratio stands at 0.29, indicating a weaker cash conversion efficiency.58
Neutral
| Breakdown | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 274.13M | 123.78M | 374.84M | 89.09M | 203.65M | 59.99M | Gross Profit |
| 232.38M | 123.78M | 374.84M | 13.08M | 129.86M | -12.93M | EBIT |
| 214.37M | 116.88M | 285.10M | 176.66M | 201.63M | 57.48M | EBITDA |
| 62.48M | 253.70M | 0.00 | 76.23M | 4.96M | 0.00 | Net Income Common Stockholders |
| 120.68M | 113.44M | 135.34M | 74.73M | 201.40M | 58.47M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 85.50M | 80.32M | 70.09M | 2.47B | 58.08M | 78.97M | Total Assets |
| 3.20B | 3.25B | 3.16B | 3.35B | 3.30B | 3.10B | Total Debt |
| 521.35M | 560.09M | 1.79B | 1.98B | 1.91B | 1.80B | Net Debt |
| 435.85M | 479.77M | 1.72B | 1.91B | 1.85B | 1.72B | Total Liabilities |
| 1.85B | 1.89B | 1.83B | 2.03B | 1.95B | 1.86B | Stockholders Equity |
| 1.35B | 1.36B | 1.32B | 1.31B | 1.32B | 1.22B |
| Cash Flow | Free Cash Flow | ||||
| 207.04M | 42.00M | 332.73M | 35.01M | -22.06M | 301.06M | Operating Cash Flow |
| 207.04M | 42.00M | 332.73M | 35.01M | -22.06M | 301.06M | Investing Cash Flow |
| -51.25M | 0.00 | 0.00 | -32.16M | -86.94M | 222.71M | Financing Cash Flow |
| -105.14M | -31.36M | -333.88M | -21.50M | 1.20M | -270.67M |
New Mountain Finance Technical Analysis
Negative
10.60
Price Trends
10.35
Positive
10.75
Negative
10.90
Negative
Market Momentum
0.15
Negative
54.06
Neutral
48.59
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NMFC, the sentiment is Negative. The current price of 10.6 is above the 20-day moving average (MA) of 10.38, above the 50-day MA of 10.35, and below the 200-day MA of 10.90, indicating a neutral trend. The MACD of 0.15 indicates Negative momentum. The RSI at 54.06 is Neutral, neither overbought nor oversold. The STOCH value of 48.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NMFC.
New Mountain Finance Risk Analysis
New Mountain Finance disclosed 97 risk factors in its most recent earnings report. New Mountain Finance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
New Mountain Finance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $966.53M | 6.82 | 17.56% | 14.07% | 46.14% | 34.91% | |
71 Outperform | $889.24M | 10.13 | 8.86% | 10.06% | 14.33% | 25.35% | |
71 Outperform | $1.29B | 25.43 | 3.27% | 15.20% | -28.04% | -69.52% | |
68 Neutral | $1.09B | 14.62 | 8.52% | 11.15% | 4.85% | -37.38% | |
66 Neutral | $987.95M | 8.72 | 9.87% | 11.03% | 12.24% | -3.21% | |
65 Neutral | $1.14B | 10.66 | 8.11% | 12.07% | -3.55% | -20.43% | |
64 Neutral | $12.66B | 9.79 | 7.67% | 17015.07% | 12.23% | -6.06% |
* Financial Sector Average
Performance Comparison
NMFC
New Mountain Finance
10.60
-0.64
-5.69%
CSWC
Capital Southwest
20.60
-2.56
-11.05%
SLRC
SLR Investment Corp.
16.42
1.69
11.47%
GSBD
Goldman Sachs BDC
10.99
-2.25
-16.99%
BCSF
Bain Capital Specialty Finance
15.36
0.83
5.71%
TRIN
Trinity Capital
14.47
1.63
12.69%
New Mountain Finance Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: 8.61%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted effective dividend coverage, stable portfolio credit performance, and strategic measures like a stock repurchase program and minimized tariff exposure. However, challenges include a slight decline in NAV, market volatility affecting M&A, and high PIK income levels. Despite these challenges, the company has several levers to maintain performance, suggesting a balanced outlook.Q1-2025 Updates
Positive Updates
Dividend Coverage and Net Investment Income
Adjusted net investment income for the quarter was $0.32 per share, covering the $0.32 per share dividend. The dividend will continue to be supported by strong recurring earnings and an additional Dividend Protection Program if necessary.
Portfolio Stability and Credit Performance
Over 96% of the portfolio is classified as 'green' with no 'red' names, indicating stable credit performance. The internal risk ratings of the portfolio were consistent with 96.5% green rated, and no new non-accruals were reported.
Stock Repurchase Program
The Board authorized a stock repurchase program to buy back up to $47 million of NMFC shares, aiming to take advantage of the current 21% discount to book value.
Sector and Tariff Exposure
NMFC has only 2% exposure to sectors most at risk for tariffs compared to 13% for peers, with a focus on sectors like healthcare, IT, and infrastructure services which have low tariff exposure.
Successful Private Equity Fundraising
New Mountain Capital successfully raised a $15.4 billion Private Equity Fund 7, up from $9.6 billion for the previous fund, showcasing strong fundraising capabilities.
Negative Updates
Decline in Net Asset Value
Net asset value per share declined by $0.1 or 80 basis points to $12.45 due to modest declines in the value of certain equity positions, particularly in UniTek.
Exposure to Market Volatility
The expectation for a significant uptick in M&A was dampened by recent market events, with spreads having tightened due to a lack of supply and significant dry powder across direct lending.
High PIK Income Levels
PIK income represented 17% of total investment income, which is higher than desired. However, progress is being made to reduce this proportion.
Company Guidance
During the first quarter of 2025, New Mountain Finance Corporation reported an adjusted net investment income of $0.32 per share, which covered their $0.32 per share dividend paid in cash on March 31st. The net asset value per share was $12.45, reflecting a slight decline of $0.1 or 80 basis points. The portfolio's loan-to-value stood at 43%, with 96% of the portfolio rated green and no red names. NMFC announced a $0.32 dividend payable on June 30th, supported by strong recurring earnings and better fee income. The current stock price implies a 21% discount to book value, with a dividend yield of 13%. Additionally, NMFC's Board authorized a stock repurchase program of up to $47 million. The company successfully raised $15.4 billion for its Private Equity Fund 7 in the previous year, with New Mountain managing over $55 billion in assets. The portfolio's average yield decreased to 10.7%, and PIK income was reduced from 19% to 17%. The portfolio's net realized loss rate has been approximately 7 basis points since the IPO. The Dividend Protection Program, which can provide up to $0.02 of extra dividend support per quarter, is in place through 2026.New Mountain Finance Corporate Events
DividendsBusiness Operations and StrategyFinancial Disclosures
New Mountain Finance Reports Q4 2024 Financial Results
Positive
Feb 26, 2025
On February 26, 2025, New Mountain Finance Corporation announced its financial results for the fourth quarter and year ended December 31, 2024, reporting a net investment income of $0.32 per share. The company declared a first quarter 2025 distribution of $0.32 per share, payable on March 31, 2025. A significant event was the partial exit from its investment in UniTek Global Services, Inc., which valued UniTek at $370 million, above its current mark. This move is part of NMFC’s strategy to diversify its top positions and optimize its liabilities, reflecting strong credit performance and strategic focus on senior-oriented assets.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.