Critical Comparison: CM Finance (CMFN) & iShares Nasdaq Biotechnology Index Fund (IBB)
CM Finance (NASDAQ: CMFN) and iShares Nasdaq Biotechnology Index Fund (NASDAQ:IBB) are both finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their valuation, profitability, dividends, risk, institutional ownership, earnings and analyst recommendations.
Valuation and Earnings
This table compares CM Finance and iShares Nasdaq Biotechnology Index Fund’s top-line revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|iShares Nasdaq Biotechnology Index Fund||N/A||N/A||N/A||N/A||N/A|
Insider and Institutional Ownership
44.0% of CM Finance shares are owned by institutional investors. Comparatively, 56.6% of iShares Nasdaq Biotechnology Index Fund shares are owned by institutional investors. 1.8% of CM Finance shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.
CM Finance pays an annual dividend of $1.00 per share and has a dividend yield of 10.9%. iShares Nasdaq Biotechnology Index Fund pays an annual dividend of $0.69 per share and has a dividend yield of 0.2%. CM Finance pays out 58.1% of its earnings in the form of a dividend.
This is a breakdown of current ratings and target prices for CM Finance and iShares Nasdaq Biotechnology Index Fund, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|iShares Nasdaq Biotechnology Index Fund||0||0||1||0||3.00|
This table compares CM Finance and iShares Nasdaq Biotechnology Index Fund’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|iShares Nasdaq Biotechnology Index Fund||N/A||N/A||N/A|
Risk and Volatility
CM Finance has a beta of 1.41, indicating that its share price is 41% more volatile than the S&P 500. Comparatively, iShares Nasdaq Biotechnology Index Fund has a beta of 1.44, indicating that its share price is 44% more volatile than the S&P 500.
CM Finance beats iShares Nasdaq Biotechnology Index Fund on 5 of the 9 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.
iShares Nasdaq Biotechnology Index Fund Company Profile
iShares Nasdaq Biotechnology ETF (the Fund), formerly iShares Nasdaq Biotechnology Index Fund, is an exchange-traded fund (ETF). The Fund seeks investment results that correspond generally to the price and yield performance of the NASDAQ Biotechnology Index (the Index). The Index contains securities of NASDAQ listed companies that are classified according to the Industry Classification Benchmark as either biotechnology or pharmaceuticals, which also meet other eligibility criteria determined by NASDAQ. The Fund invests in a representative sample of securities included in the Index that collectively has an investment profile similar to the Index. Due to the use of representative sampling, the Fund may or may not hold all of the securities that are included in the Index. The Fund’s investment advisor is BlackRock Fund Advisors, which is indirectly owned by BlackRock, Inc.
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