CM Finance (NASDAQ: CMFN) and PowerShares QQQ Trust, Series 1 (NASDAQ:QQQ) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their profitabiliy, institutional ownership, earnings, risk, dividends, valuation and analyst recommendations.

Insider and Institutional Ownership

42.2% of CM Finance shares are owned by institutional investors. Comparatively, 36.3% of PowerShares QQQ Trust, Series 1 shares are owned by institutional investors. 1.8% of CM Finance shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares CM Finance and PowerShares QQQ Trust, Series 1’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CM Finance N/A N/A N/A $1.66 6.27
PowerShares QQQ Trust, Series 1 N/A N/A N/A N/A N/A

Profitability

This table compares CM Finance and PowerShares QQQ Trust, Series 1’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CM Finance 72.19% 10.11% 5.41%
PowerShares QQQ Trust, Series 1 N/A N/A N/A

Analyst Recommendations

This is a summary of recent recommendations for CM Finance and PowerShares QQQ Trust, Series 1, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CM Finance 0 1 0 0 2.00
PowerShares QQQ Trust, Series 1 0 0 0 0 N/A

Volatility and Risk

CM Finance has a beta of 1.42, indicating that its stock price is 42% more volatile than the S&P 500. Comparatively, PowerShares QQQ Trust, Series 1 has a beta of 1.11, indicating that its stock price is 11% more volatile than the S&P 500.

Dividends

CM Finance pays an annual dividend of $1.00 per share and has a dividend yield of 9.6%. PowerShares QQQ Trust, Series 1 pays an annual dividend of $1.21 per share and has a dividend yield of 0.9%. CM Finance pays out 60.2% of its earnings in the form of a dividend.

Summary

CM Finance beats PowerShares QQQ Trust, Series 1 on 7 of the 8 factors compared between the two stocks.

CM Finance Company Profile

CM Finance Inc is an externally managed, non-diversified closed-end management investment company. The Company is a specialty finance company that invests primarily in the debt of the United States middle-market companies. The Company’s primary investment objective is to maximize total return to stockholders in the form of current income and capital appreciation by investing in debt and related equity of privately held lower middle-market companies. As of June 30, 2016, the Company’s portfolio consisted of debt and equity investments in 22 portfolio companies. It invests in unitranche loans and standalone second and first lien loans, with an emphasis on floating rate debt. It also selectively invests in mezzanine loans/structured equity and in the equity of portfolio companies through warrants and other instruments.CM Investment Partners LLC is an external investment advisor of the Company.

PowerShares QQQ Trust, Series 1 Company Profile

PowerShares QQQ Trust, Series 1 is a unit investment trust that issues securities called Nasdaq-100 Index Tracking Stock. The Trust’s investment objective is to provide investment results that generally correspond to the price and yield performance of the Nasdaq-100 Index. The Trust provides investors with the opportunity to purchase units of beneficial interest in the Trust representing proportionate undivided interests in the portfolio of securities held by the Trust, which consists of substantially all of the securities, in substantially the same weighting, as the component securities of the Nasdaq-100 Index. Invesco PowerShares Capital Management, LLC is the Sponsor of the Trust and The Bank of New York Mellon is the Trustee.

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