Critical Review: Goldman Sachs BDC (GSBD) vs. American Capital (ACAS)
Goldman Sachs BDC (NYSE: GSBD) and American Capital (NASDAQ:ACAS) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their dividends, institutional ownership, valuation, risk, analyst recommendations, earnings and profitabiliy.
Insider & Institutional Ownership
36.9% of Goldman Sachs BDC shares are held by institutional investors. Comparatively, 65.7% of American Capital shares are held by institutional investors. 0.3% of Goldman Sachs BDC shares are held by company insiders. Comparatively, 9.2% of American Capital 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.
This is a summary of recent ratings for Goldman Sachs BDC and American Capital, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Goldman Sachs BDC||1||4||3||0||2.25|
Goldman Sachs BDC presently has a consensus price target of $22.18, indicating a potential downside of 2.03%. Given Goldman Sachs BDC’s higher probable upside, analysts plainly believe Goldman Sachs BDC is more favorable than American Capital.
This table compares Goldman Sachs BDC and American Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Goldman Sachs BDC||35.73%||11.81%||6.64%|
Volatility & Risk
Goldman Sachs BDC has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500. Comparatively, American Capital has a beta of 1, indicating that its share price has a similar volatility profile to the S&P 500.
Earnings & Valuation
This table compares Goldman Sachs BDC and American Capital’s top-line 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||$1.29||17.55|
American Capital 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.
Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.0%. American Capital does not pay a dividend. 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.
American Capital beats Goldman Sachs BDC on 7 of the 11 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 American Capital
Acas LLC., formerly American Capital, Ltd. (American Capital) is a global asset manager and private equity firm. American Capital, both directly and through its asset management business, originates, underwrites and manages investments in middle market private equity, leveraged finance, real estate, energy and structured products. It primarily invests in senior and mezzanine debt and equity in buyouts of private companies sponsored by the Company (American Capital One Stop Buyouts) or sponsored by other private equity funds and provide capital directly to early-stage and mature private and small public companies (Sponsor Finance and Other Investments). It also invests in first and second lien floating rate loans to the United States-based companies (Senior Floating Rate Loans or SFRL) and structured finance investments (Structured Products), including collateralized loan obligation (CLO) securities and commercial mortgages, and commercial mortgage backed securities (CMBS).
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