Harvest Capital Credit Corporation (NASDAQ: HCAP) and Golub Capital BDC (NASDAQ:GBDC) are both finance companies, but which is the superior business? We will contrast the two companies based on the strength of their analyst recommendations, valuation, earnings, profitability, institutional ownership, risk and dividends.

Valuation & Earnings

This table compares Harvest Capital Credit Corporation and Golub Capital BDC’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Harvest Capital Credit Corporation N/A N/A N/A $0.90 14.76
Golub Capital BDC N/A N/A N/A $1.33 14.36

Golub Capital BDC is trading at a lower price-to-earnings ratio than Harvest Capital Credit Corporation, indicating that it is currently the more affordable of the two stocks.

Risk & Volatility

Harvest Capital Credit Corporation has a beta of 0.76, indicating that its stock price is 24% less volatile than the S&P 500. Comparatively, Golub Capital BDC has a beta of 0.68, indicating that its stock price is 32% less volatile than the S&P 500.

Dividends

Harvest Capital Credit Corporation pays an annual dividend of $1.35 per share and has a dividend yield of 10.2%. Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.7%. Harvest Capital Credit Corporation pays out 150.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Golub Capital BDC pays out 96.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Institutional and Insider Ownership

5.8% of Harvest Capital Credit Corporation shares are held by institutional investors. Comparatively, 41.8% of Golub Capital BDC shares are held by institutional investors. 9.5% of Harvest Capital Credit Corporation shares are held by company insiders. Comparatively, 2.4% of Golub Capital BDC shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Harvest Capital Credit Corporation and Golub Capital BDC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Harvest Capital Credit Corporation 0 1 0 0 2.00
Golub Capital BDC 0 3 0 0 2.00

Harvest Capital Credit Corporation presently has a consensus price target of $13.50, suggesting a potential upside of 1.66%. Golub Capital BDC has a consensus price target of $19.50, suggesting a potential upside of 2.09%. Given Golub Capital BDC’s higher possible upside, analysts plainly believe Golub Capital BDC is more favorable than Harvest Capital Credit Corporation.

Profitability

This table compares Harvest Capital Credit Corporation and Golub Capital BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Harvest Capital Credit Corporation 27.50% 11.71% 6.97%
Golub Capital BDC 53.62% 7.86% 3.95%

Harvest Capital Credit Corporation Company Profile

Harvest Capital Credit Corporation is an externally managed, closed-end, non-diversified management investment company. The Company operates as a business development company and provides customized financing solutions for small to mid-sized companies. Its investment objective is to generate both current income and capital appreciation by making direct investments in the form of subordinated debt, senior debt, and to a lesser extent, minority equity investments in privately-held the United States small to mid-sized companies. Its investment portfolio includes over 56.8% of senior secured term loans, 40.8% of junior secured term loans, 1.3% of equity investments and 1.1% of collateralized loan obligation (CLO) equity at fair value. It may also invest in other investments, such as loans to larger, publicly-traded companies, high-yield bonds and distressed debt securities. It may also invest in debt and equity securities issued by CLO funds. HCAP Advisors LLC is its investment adviser.

Golub Capital BDC Company Profile

Golub Capital BDC, Inc. is an externally managed, non-diversified, closed-end, management investment company. The Company’s investment objective is to generate current income and capital appreciation by investing primarily in senior secured and one stop loans of the United States middle-market companies. It may also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in the United States middle-market companies. The Company seeks to create a portfolio that includes primarily senior secured and one stop loans by primarily investing in the securities of the United States middle-market companies. It generally invests in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. The Company’s investment activities are managed by its investment advisor, GC Advisors LLC (GC Advisors).

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