MCG Capital (NASDAQ: MCGC) and Golub Capital BDC (NASDAQ:GBDC) are both closed end funds companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, valuation, risk, earnings and profitability.

Institutional and Insider Ownership

40.6% of Golub Capital BDC shares are owned by institutional investors. 2.4% of Golub Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares MCG Capital and Golub Capital BDC’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
MCG Capital N/A N/A N/A $0.11 N/A
Golub Capital BDC $137.76 million 7.98 $82.28 million $1.41 13.09

Golub Capital BDC has higher revenue and earnings than MCG Capital. MCG Capital 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.

Dividends

Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.9%. MCG Capital does not pay a dividend. Golub Capital BDC pays out 90.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Ratings

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

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MCG Capital 0 0 0 0 N/A
Golub Capital BDC 0 3 0 0 2.00

Golub Capital BDC has a consensus target price of $19.50, indicating a potential upside of 5.63%.

Profitability

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

Net Margins Return on Equity Return on Assets
MCG Capital -9.19% -0.34% -0.33%
Golub Capital BDC 58.06% 7.90% 4.06%

Summary

Golub Capital BDC beats MCG Capital on 8 of the 9 factors compared between the two stocks.

MCG Capital Company Profile

PFLT Funding II, LLC, formerly MCG Capital Corporation, is a United States-based company. The Company provides products and services.

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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