Goldman Sachs BDC (NYSE: GSBD) and Gamco Investors (NYSE:GBL) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, analyst recommendations, dividends, valuation, earnings and profitabiliy.

Profitability

This table compares Goldman Sachs BDC and Gamco Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs BDC 39.55% 10.92% 6.18%
Gamco Investors 32.42% -46.35% 60.28%

Risk & Volatility

Goldman Sachs BDC has a beta of 0.86, meaning that its share price is 14% less volatile than the S&P 500. Comparatively, Gamco Investors has a beta of 1.06, meaning that its share price is 6% more volatile than the S&P 500.

Insider and Institutional Ownership

35.9% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 15.7% of Gamco Investors shares are owned by institutional investors. 0.3% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 79.0% of Gamco Investors shares are owned by company 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.

Earnings and Valuation

This table compares Goldman Sachs BDC and Gamco Investors’ revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Goldman Sachs BDC N/A N/A N/A $1.36 16.67
Gamco Investors $357.53 million 2.40 $188.67 million $3.85 7.70

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

Analyst Ratings

This is a summary of recent ratings and recommmendations for Goldman Sachs BDC and Gamco Investors, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 1 4 3 0 2.25
Gamco Investors 0 0 0 0 N/A

Goldman Sachs BDC currently has a consensus price target of $22.18, indicating a potential downside of 2.16%. Given Goldman Sachs BDC’s higher probable upside, analysts clearly believe Goldman Sachs BDC is more favorable than Gamco Investors.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 7.9%. Gamco Investors pays an annual dividend of $0.08 per share and has a dividend yield of 0.3%. Goldman Sachs BDC pays out 132.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gamco Investors pays out 2.1% of its earnings in the form of a dividend. Goldman Sachs BDC has increased its dividend for 5 consecutive years. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Goldman Sachs BDC beats Gamco Investors on 7 of the 13 factors compared between the two stocks.

About Goldman Sachs BDC

Goldman Sachs BDC, Inc. is a closed-end management investment company. The Company is a specialty finance company, which is focused on lending to middle-market companies. The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments. The Company invests primarily in the United States middle-market companies. The Company invests in illiquid securities, including debt and equity investments, of middle-market companies. As of December 31, 2016, its portfolio included first lien/senior secured debt, first lien/last-out unitranche, second lien/senior secured debt, unsecured debt, preferred stock, common stock, and investment funds and vehicles.

About Gamco Investors

GAMCO Investors, Inc. is a holding company. The Company is a provider of investment advisory services to open and closed-end funds, institutional and private wealth management investors principally in the United States. The Company operates through the investment advisory and asset management business segment. It manages assets on a discretionary basis and invests in securities through various investment styles. Its assets under management are organized into three groups: Institutional and Private Wealth Management; Open and Closed-End Funds, and the GAMCO International SICAV (SICAV). The Company provides advisory services to a range of investors, including corporate retirement plans, foundations, endowments and private wealth clients, and also serves as sub-advisor to third-party investment funds, including registered investment companies. As of December 31, 2016, it had provided advisory services to 21 open-end funds, 15 closed-end funds and one exchange traded managed fund.

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