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New Mountain Finance (NMFC)
NASDAQ:NMFC
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New Mountain Finance
(NASDAQ:NMFC)
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Rating:65Neutral
Price Target:―
New Mountain Finance's strong profitability and undervaluation are key strengths, bolstered by a high dividend yield and strategic asset management. However, challenges in revenue growth, cash flow, and technical weaknesses suggest cautious optimism. The earnings call reflects a balanced outlook with strategic successes and areas of concern, warranting a moderate score.
New Mountain Finance (NMFC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.03B
Dividend Yield13.33%
Average Volume (3M)552.90K
Price to Earnings (P/E)12.8
Beta (1Y)0.39
Revenue Growth39.05%
EPS Growth-32.62%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.32
Shares Outstanding106,360,960
10 Day Avg. Volume934,849
30 Day Avg. Volume552,896
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)N/A
P/FCF RatioN/A
Enterprise Value/Market Cap2.77
Enterprise Value/Revenue9.28
Enterprise Value/Gross Profit10.54
Enterprise Value/Ebitda13.02
Forecast
1Y Price Target
$10.50Price Target Upside7.25% Upside
Rating ConsensusHold
Number of Analyst Covering4
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 Earnings Call Summary
Earnings Call Date:Aug 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 29, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed outlook, with stability in dividends and a strong, well-performing portfolio offset by challenges in specific sectors and a decline in net asset value. The dividend protection program provides a buffer against current market headwinds, but ongoing challenges in the healthcare and consumer products sectors, impacted by tariffs and operational issues, present risks that NMFC needs to address.Q2-2025 Updates
Positive Updates
Dividend Stability and Protection
NMFC announced a $0.32 dividend payable on September 30, supported by the dividend protection program through the fourth quarter of 2026. This program is designed to stabilize the dividend during periods of tighter new issue spreads and lower fees.
Strong Portfolio Performance
95% of NMFC's investments are rated green on the heat map, with nearly 80% exposure to senior-oriented assets. The average loan-to-value of the portfolio stands at 45%, supporting a stable credit performance.
Stock Repurchase Program
NMFC repurchased approximately $16 million of shares year-to-date, with an additional $31 million of Board authorization remaining. This reflects confidence in the company's valuation and future prospects.
Low Non-Accruals and Realized Losses
Non-accruals in the portfolio remain low at $38 million, or 1.2% of the portfolio. Since IPO, NMFC has realized net losses of only $16 million, with a total net realized loss rate of just 1 basis point.
Negative Updates
Decline in Net Asset Value
Net asset value per share declined by $0.24 compared to Q1, with notable declines in Edmentum, a dental health care business, and a consumer products business impacted by tariffs.
Challenges with Consumer Products Business
A consumer products company in the portfolio faced significant impacts from tariffs on its China-oriented supply chain, requiring liquidity support before year-end.
Decreased Total Investment Income
Total investment income for the quarter was $83 million, a 12% decrease over the prior year. This was attributed to lower yields on originations compared to repayments.
Headwinds in Healthcare Sector
The dental business faced challenges due to labor inflation and lower patient volumes, requiring management changes to improve execution.
Company Guidance
During the New Mountain Finance Corporation Second Quarter 2025 Earnings Call, several key metrics and guidance points were discussed. Adjusted net investment income for the quarter was $0.32 per share, covering the $0.32 per share dividend paid in cash on June 30. The net asset value per share stood at $12.21, a decline of $0.24 from the previous quarter. The portfolio's loan-to-value ratio was reported at 45%, with 95% of investments rated green on their heat map, indicating strong credit performance. The company announced a $0.32 dividend payable on September 30, supported by a dividend protection program in place until the fourth quarter of 2026. New Mountain Finance Corporation's stock is trading at a 15% discount to book value, with the $0.32 quarterly dividend representing over a 12% yield. The firm has repurchased approximately $16 million of shares year-to-date under a stock repurchase program, with $31 million of Board authorization remaining. The company also highlighted plans to refinance higher-cost debt and improve portfolio quality, including increasing exposure to senior-oriented assets, which currently make up nearly 80% of the portfolio.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 | 307.59M | 123.78M | 374.84M | 89.09M | 203.65M | 59.99M |
| Gross Profit | 270.65M | 123.78M | 374.84M | 13.08M | 129.86M | -12.93M |
| EBITDA | 219.14M | 116.88M | 0.00 | 76.23M | 4.96M | 0.00 |
| Net Income | 93.98M | 113.44M | 135.34M | 74.73M | 201.40M | 58.47M |
Balance Sheet | ||||||
| Total Assets | 3.16B | 3.25B | 3.16B | 3.35B | 3.30B | 3.10B |
| Cash, Cash Equivalents and Short-Term Investments | 57.39M | 80.32M | 70.09M | 2.47B | 58.08M | 78.97M |
| Total Debt | 521.31M | 560.09M | 1.79B | 1.98B | 1.91B | 1.80B |
| Total Liabilities | 1.85B | 1.89B | 1.83B | 2.03B | 1.95B | 1.86B |
| Stockholders Equity | 1.31B | 1.36B | 1.32B | 1.31B | 1.32B | 1.22B |
Cash Flow | ||||||
| Free Cash Flow | 277.86M | 42.00M | 332.73M | 35.01M | -22.06M | 301.06M |
| Operating Cash Flow | 277.86M | 42.00M | 332.73M | 35.01M | -22.06M | 301.06M |
| Investing Cash Flow | -6.45M | 0.00 | 0.00 | -32.16M | -86.94M | 222.71M |
| Financing Cash Flow | -346.13M | -31.36M | -333.88M | -21.50M | 1.20M | -270.67M |
New Mountain Finance Technical Analysis
Negative
9.79
Price Trends
10.06
Negative
10.07
Negative
10.11
Negative
Market Momentum
-0.10
Positive
43.52
Neutral
15.90
Positive
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 9.79 is below the 20-day moving average (MA) of 10.00, below the 50-day MA of 10.06, and below the 200-day MA of 10.11, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 43.52 is Neutral, neither overbought nor oversold. The STOCH value of 15.90 is Positive, 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 (68)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | 1.11B | 7.08 | 14.05% | 12.66% | 31.43% | 30.85% | |
71 Outperform | 1.25B | 14.10 | 9.11% | 10.08% | 12.82% | -5.37% | |
71 Outperform | 843.41M | 9.50 | ― | 10.55% | 5.87% | -12.64% | |
71 Outperform | 1.25B | 8.82 | ― | 15.97% | -55.16% | 47.09% | |
66 Neutral | 935.40M | 8.67 | ― | 12.47% | -3.29% | -16.86% | |
65 Neutral | $1.03B | 12.78 | 6.18% | 13.33% | 39.05% | -32.62% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% |
* Financial Sector Average
Performance Comparison
NMFC
New Mountain Finance
9.79
-0.86
-8.08%
PFLT
Pennantpark $
9.26
-0.97
-9.48%
SLRC
SLR Investment Corp.
15.54
2.04
15.11%
CGBD
Carlyle Secured Lending Inc
13.18
-2.55
-16.21%
BCSF
Bain Capital Specialty Finance
14.44
-0.49
-3.28%
TRIN
Trinity Capital
16.11
4.02
33.25%
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
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.