Comparing Goldman Sachs BDC (NYSE:GSBD) and Fidus Investment (NASDAQ:FDUS)

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

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Goldman Sachs BDC and Fidus Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goldman Sachs BDC	2	4	0	0	1.67
Fidus Investment	0	2	1	1	2.75

Goldman Sachs BDC currently has a consensus target price of $9.17, indicating a potential upside of 3.17%. Fidus Investment has a consensus target price of $21.00, indicating a potential upside of 14.13%. Given Fidus Investment’s stronger consensus rating and higher probable upside, analysts clearly believe Fidus Investment is more favorable than Goldman Sachs BDC.

Valuation and Earnings

This table compares Goldman Sachs BDC and Fidus Investment”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goldman Sachs BDC	$365.57 million	2.74	$119.27 million	$0.65	13.67
Fidus Investment	$155.87 million	4.48	$82.40 million	$2.28	8.07

Goldman Sachs BDC has higher revenue and earnings than Fidus Investment. Fidus Investment 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.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Goldman Sachs BDC	21.32%	10.94%	4.66%
Fidus Investment	49.51%	11.19%	5.97%

Insider & Institutional Ownership

28.7% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 28.1% of Fidus Investment shares are owned by institutional investors. 0.1% of Goldman Sachs BDC shares are owned by insiders. Comparatively, 0.9% of Fidus Investment shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 14.4%. Fidus Investment pays an annual dividend of $1.72 per share and has a dividend yield of 9.3%. Goldman Sachs BDC pays out 196.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Fidus Investment pays out 75.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Volatility and Risk

Goldman Sachs BDC has a beta of 0.58, indicating that its share price is 42% less volatile than the S&P 500. Comparatively, Fidus Investment has a beta of 0.68, indicating that its share price is 32% less volatile than the S&P 500.

Summary

Fidus Investment beats Goldman Sachs BDC on 12 of the 17 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 Fidus Investment

Fidus Investment Corporation is a business development company. It specializing in leveraged buyouts, refinancings, change of ownership transactions, recapitalizations, strategic acquisitions, mezzanine, growth capital, business expansion, lower middle market investments, debt investments, subordinated and second lien loans, senior secured and unitranche debt, preferred equity, warrants, subordinated debt, senior subordinated notes, junior secured loans, and unitranche loans. It does not invest in turnarounds or distressed situations. The fund prefers to invest in aerospace and defense, business services, consumer products and services including retail, food, and beverage, healthcare products and services, industrial products and services, information technology services, niche manufacturing, transportation and logistics, and value-added distribution sectors. It seeks to invest in companies based in United States. The fund typically invests between $5 million and $15 million per transaction in companies with annual revenues between $10 million and $150 million and an annual EBITDA between $3 million and $20 million, but it can occasionally invest in larger or smaller companies. It seeks to acquire minority equity stakes and board observation rights in conjunction with its investments.