Sprott (NYSE:SII) & Monroe Capital (NASDAQ:MRCC) Head to Head Review

Monroe Capital (NASDAQ:MRCC) and Sprott (NYSE:SII) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, risk, earnings, dividends and institutional ownership.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Monroe Capital	3.74%	10.70%	4.38%
Sprott	25.21%	15.04%	12.25%

Risk and Volatility

Monroe Capital has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500. Comparatively, Sprott has a beta of 1.01, suggesting that its share price is 1% more volatile than the S&P 500.

Earnings & Valuation

This table compares Monroe Capital and Sprott”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Monroe Capital	$7.14 million	23.07	$9.70 million	$0.09	84.44
Sprott	$178.65 million	10.00	$49.29 million	$1.93	35.90

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

Analyst Ratings

This is a breakdown of current recommendations for Monroe Capital and Sprott, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Monroe Capital	1	1	0	0	1.50
Sprott	0	1	2	0	2.67

Monroe Capital presently has a consensus price target of $7.63, indicating a potential upside of 0.33%. Given Monroe Capital’s higher probable upside, research analysts clearly believe Monroe Capital is more favorable than Sprott.

Insider and Institutional Ownership

28.3% of Sprott shares are held by institutional investors. 3.8% of Monroe Capital shares are held by insiders. Comparatively, 18.3% of Sprott shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company will outperform the market over the long term.

Dividends

Monroe Capital pays an annual dividend of $1.00 per share and has a dividend yield of 13.2%. Sprott pays an annual dividend of $1.20 per share and has a dividend yield of 1.7%. Monroe Capital pays out 1,111.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Sprott pays out 62.2% of its earnings in the form of a dividend. Sprott has increased its dividend for 1 consecutive years.

Summary

Sprott beats Monroe Capital on 13 of the 17 factors compared between the two stocks.

About Monroe Capital

Monroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.

About Sprott

Sprott Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides asset management, portfolio management, wealth management, fund management, and administrative and consulting services to its clients. It offers mutual funds, hedge funds, and offshore funds, along with managed accounts. Further, the firm also provides broker-dealer activities. Sprott Inc. was formed on February 13, 2008 and is based in Toronto, Canada.