Goldman Sachs BDC (NYSE:GSBD) vs. Saratoga Investment (NYSE:SAR) Financial Contrast

Goldman Sachs BDC (NYSE:GSBD) and Saratoga Investment (NYSE:SAR) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their valuation, earnings, analyst recommendations, dividends, risk, profitability and institutional ownership.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 14.3%. Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.3%. Goldman Sachs BDC pays out 110.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Saratoga Investment pays out 128.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Goldman Sachs BDC and Saratoga Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Goldman Sachs BDC	34.72%	12.78%	5.60%
Saratoga Investment	27.19%	10.09%	3.29%

Earnings & Valuation

This table compares Goldman Sachs BDC and Saratoga Investment”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goldman Sachs BDC	$434.37 million	2.36	$62.87 million	$1.16	7.73
Saratoga Investment	$148.85 million	2.44	$28.09 million	$2.34	9.66

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

Analyst Ratings

This is a summary of recent recommendations for Goldman Sachs BDC and Saratoga Investment, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goldman Sachs BDC	2	3	0	0	1.60
Saratoga Investment	0	6	0	0	2.00

Goldman Sachs BDC currently has a consensus price target of $9.75, suggesting a potential upside of 8.76%. Saratoga Investment has a consensus price target of $23.63, suggesting a potential upside of 4.53%. Given Goldman Sachs BDC’s higher probable upside, equities research analysts plainly believe Goldman Sachs BDC is more favorable than Saratoga Investment.

Institutional and Insider Ownership

28.7% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are owned by institutional investors. 0.1% of Goldman Sachs BDC shares are owned by insiders. Comparatively, 10.0% of Saratoga Investment shares are owned by 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.

Volatility and Risk

Goldman Sachs BDC has a beta of 0.63, indicating that its share price is 37% less volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.56, indicating that its share price is 44% less volatile than the S&P 500.

Summary

Goldman Sachs BDC beats Saratoga Investment on 10 of the 15 factors compared between the two stocks.

About Goldman Sachs BDC

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.