Brookfield Asset Management (NYSE:BAM) vs. Monroe Capital (NASDAQ:MRCC) Critical Analysis

Monroe Capital (NASDAQ:MRCC) and Brookfield Asset Management (NYSE:BAM) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their risk, valuation, profitability, earnings, dividends, analyst recommendations and institutional ownership.

Volatility & Risk

Monroe Capital has a beta of 1.03, suggesting that its stock price is 3% more volatile than the S&P 500. Comparatively, Brookfield Asset Management has a beta of 1.42, suggesting that its stock price is 42% more volatile than the S&P 500.

Institutional & Insider Ownership

68.4% of Brookfield Asset Management shares are held by institutional investors. 3.6% of Monroe Capital shares are held by company insiders. Comparatively, 11.0% of Brookfield Asset Management shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation and Earnings

This table compares Monroe Capital and Brookfield Asset Management”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Monroe Capital	$18.11 million	10.19	$370,000.00	$0.60	14.19
Brookfield Asset Management	$4.06 billion	5.90	$451.00 million	$1.13	50.58

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

Dividends

Monroe Capital pays an annual dividend of $1.00 per share and has a dividend yield of 11.7%. Brookfield Asset Management pays an annual dividend of $1.52 per share and has a dividend yield of 2.7%. Monroe Capital pays out 166.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Brookfield Asset Management pays out 134.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Monroe Capital	20.97%	12.14%	4.75%
Brookfield Asset Management	49.69%	85.03%	61.67%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Monroe Capital and Brookfield Asset Management, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Monroe Capital	0	0	1	0	3.00
Brookfield Asset Management	2	5	5	0	2.25

Monroe Capital presently has a consensus target price of $9.00, indicating a potential upside of 5.70%. Brookfield Asset Management has a consensus target price of $53.46, indicating a potential downside of 6.46%. Given Monroe Capital’s stronger consensus rating and higher possible upside, analysts plainly believe Monroe Capital is more favorable than Brookfield Asset Management.

Summary

Brookfield Asset Management beats Monroe Capital on 12 of the 16 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 Brookfield Asset Management

Brookfield Asset Management Ltd. is a real estate investment firm specializing in alternative asset management services. Its renewable power and transition business includes the operates in the hydroelectric, wind, solar, distributed generation, and sustainable solution sector. The company's infrastructure business engages in the utilities, transport, midstream, and data infrastructure sectors. In addition, its private equity business offers industrial, infrastructure, and business services sectors; and real estate business, which includes housing, logistics, hospitality, science and innovation, office, and retail sectors. Further, it provides credit business; and insurance solution in the reinsurance, annuities, operating platform, and investment solutions sectors. Brookfield Asset Management Ltd. was incorporated in 2022 and is headquartered in Toronto, Canada.