Reviewing MidCap Financial Investment (NASDAQ:MFIC) & Donnelley Financial Solutions (NYSE:DFIN)

MidCap Financial Investment (NASDAQ:MFIC) and Donnelley Financial Solutions (NYSE:DFIN) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their risk, profitability, dividends, analyst recommendations, earnings, institutional ownership and valuation.

Analyst Ratings

This is a summary of current ratings and target prices for MidCap Financial Investment and Donnelley Financial Solutions, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
MidCap Financial Investment	1	7	0	0	1.88
Donnelley Financial Solutions	0	2	2	1	2.80

MidCap Financial Investment presently has a consensus price target of $10.25, indicating a potential downside of 0.39%. Donnelley Financial Solutions has a consensus price target of $74.00, indicating a potential upside of 7.69%. Given Donnelley Financial Solutions’ stronger consensus rating and higher probable upside, analysts plainly believe Donnelley Financial Solutions is more favorable than MidCap Financial Investment.

Valuation and Earnings

This table compares MidCap Financial Investment and Donnelley Financial Solutions”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
MidCap Financial Investment	$320.88 million	2.64	$63.17 million	($0.85)	-12.11
Donnelley Financial Solutions	$787.20 million	2.13	$32.40 million	$3.79	18.13

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

Risk and Volatility

MidCap Financial Investment has a beta of 0.59, suggesting that its stock price is 41% less volatile than the S&P 500. Comparatively, Donnelley Financial Solutions has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500.

Insider & Institutional Ownership

28.4% of MidCap Financial Investment shares are held by institutional investors. Comparatively, 93.8% of Donnelley Financial Solutions shares are held by institutional investors. 0.9% of MidCap Financial Investment shares are held by insiders. Comparatively, 5.2% of Donnelley Financial Solutions shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
MidCap Financial Investment	-26.23%	11.25%	4.39%
Donnelley Financial Solutions	12.37%	26.70%	12.70%

Summary

Donnelley Financial Solutions beats MidCap Financial Investment on 13 of the 15 factors compared between the two stocks.

About MidCap Financial Investment

MidCap Financial Investment Corporation is a business development company that provides financing to middle-market companies. Its investments are primarily in privately held businesses and may include senior secured loans, unitranche and other subordinated debt, and, to a lesser extent, equity securities. The company focuses mainly on lending to businesses in the United States across a range of industries. Its financing can support acquisitions, refinancings, growth initiatives, and other corporate needs.

About Donnelley Financial Solutions

Donnelley Financial Solutions, Inc. provides software and services that help companies and investment firms meet regulatory, compliance and financial-communication requirements. Its offerings include support for preparing and filing regulatory documents, financial reporting and shareholder communications. The company also provides technology for managing regulatory disclosures and transactions, including virtual data rooms used in mergers, acquisitions and other corporate processes. Its clients include public and private companies, investment managers, funds and professional services firms.