Critical Contrast: Goldman Sachs BDC (NYSE:GSBD) & Golub Capital BDC (NASDAQ:GBDC)

Golub Capital BDC (NASDAQ:GBDC) and Goldman Sachs BDC (NYSE:GSBD) are both finance companies, but which is the better business? We will contrast the two businesses based on the strength of their analyst recommendations, earnings, dividends, valuation, institutional ownership, profitability and risk.

Institutional & Insider Ownership

42.4% of Golub Capital BDC shares are owned by institutional investors. Comparatively, 28.7% of Goldman Sachs BDC shares are owned by institutional investors. 1.4% of Golub Capital BDC shares are owned by company insiders. Comparatively, 0.1% of Goldman Sachs BDC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings for Golub Capital BDC and Goldman Sachs BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Golub Capital BDC	0	2	4	1	2.86
Goldman Sachs BDC	3	3	0	1	1.86

Golub Capital BDC currently has a consensus price target of $13.90, indicating a potential upside of 7.84%. Goldman Sachs BDC has a consensus price target of $8.75, indicating a potential downside of 1.98%. Given Golub Capital BDC’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Golub Capital BDC is more favorable than Goldman Sachs BDC.

Valuation & Earnings

This table compares Golub Capital BDC and Goldman Sachs BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Golub Capital BDC	$870.78 million	3.84	$376.65 million	$0.65	19.83
Goldman Sachs BDC	$365.57 million	2.75	$119.27 million	$0.52	17.17

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

Profitability

This table compares Golub Capital BDC and Goldman Sachs BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Golub Capital BDC	21.45%	9.91%	4.39%
Goldman Sachs BDC	17.19%	11.04%	4.62%

Risk & Volatility

Golub Capital BDC has a beta of 0.41, suggesting that its stock price is 59% less volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.61, suggesting that its stock price is 39% less volatile than the S&P 500.

Dividends

Golub Capital BDC pays an annual dividend of $1.32 per share and has a dividend yield of 10.2%. Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 14.3%. Golub Capital BDC pays out 203.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Goldman Sachs BDC pays out 246.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Golub Capital BDC beats Goldman Sachs BDC on 12 of the 16 factors compared between the two stocks.

About Golub Capital BDC

Golub Capital BDC, Inc. (GBDC) is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails. It seeks to invest in the United States. It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.

About Goldman Sachs BDC

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.