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

Valuation & Earnings

This table compares Goldman Sachs BDC and BlackRock’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Goldman Sachs BDC N/A N/A N/A $1.29 17.47
BlackRock $11.52 billion 6.01 $5.05 billion $20.84 20.47

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

Insider and Institutional Ownership

36.9% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 80.8% of BlackRock shares are owned by institutional investors. 0.3% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 1.9% of BlackRock shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.

Risk and Volatility

Goldman Sachs BDC has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, BlackRock has a beta of 1.71, indicating that its share price is 71% more volatile than the S&P 500.

Profitability

This table compares Goldman Sachs BDC and BlackRock’s 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%
BlackRock 29.92% 11.79% 1.52%

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Goldman Sachs BDC and BlackRock, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 1 4 3 0 2.25
BlackRock 0 5 7 0 2.58

Goldman Sachs BDC presently has a consensus target price of $22.18, suggesting a potential downside of 1.55%. BlackRock has a consensus target price of $436.00, suggesting a potential upside of 2.23%. Given BlackRock’s stronger consensus rating and higher probable upside, analysts clearly believe BlackRock is more favorable than Goldman Sachs BDC.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.0%. BlackRock pays an annual dividend of $10.00 per share and has a dividend yield of 2.3%. Goldman Sachs BDC pays out 139.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. BlackRock pays out 48.0% of its earnings in the form of a dividend. BlackRock has raised its dividend for 7 consecutive years.

Summary

BlackRock beats Goldman Sachs BDC on 11 of the 14 factors compared between the two stocks.

Goldman Sachs BDC Company Profile

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.

BlackRock Company Profile

BlackRock, Inc. (BlackRock) is an investment management company. BlackRock provides a range of investment and risk management services to institutional and retail clients worldwide. Its diverse platform of active (alpha) and index (beta) investment strategies across asset classes enables the Company to tailor investment outcomes and asset allocation solutions for clients. Its product offerings include single- and multi-asset portfolios investing in equities, fixed income, alternatives and money market instruments. Its products are offered directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs), separate accounts, collective investment funds and other pooled investment vehicles. It offers its Aladdin investment system, as well as risk management, outsourcing, advisory and technology services, to institutional investors and wealth management intermediaries under the BlackRock Solutions name.

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