Golub Capital BDC (NASDAQ:GBDC – Get Free Report) and Saratoga Investment (NYSE:SAR – Get Free Report) are both finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their profitability, earnings, analyst recommendations, dividends, institutional ownership, valuation and risk.
Profitability
This table compares Golub Capital BDC and Saratoga Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Golub Capital BDC | 42.81% | 10.87% | 4.87% |
| Saratoga Investment | 27.19% | 10.09% | 3.29% |
Analyst Recommendations
This is a breakdown of current ratings for Golub Capital BDC and Saratoga Investment, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Golub Capital BDC | 0 | 2 | 2 | 0 | 2.50 |
| Saratoga Investment | 1 | 5 | 0 | 0 | 1.83 |
Dividends
Golub Capital BDC pays an annual dividend of $1.56 per share and has a dividend yield of 11.2%. Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.8%. Golub Capital BDC pays out 109.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. 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.
Institutional and Insider Ownership
42.4% of Golub Capital BDC shares are owned by institutional investors. Comparatively, 19.1% of Saratoga Investment shares are owned by institutional investors. 3.6% of Golub Capital BDC shares are owned by company insiders. Comparatively, 10.0% of Saratoga Investment shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.
Volatility & Risk
Golub Capital BDC has a beta of 0.47, meaning that its stock price is 53% less volatile than the S&P 500. Comparatively, Saratoga Investment has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500.
Earnings and Valuation
This table compares Golub Capital 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 | |
| Golub Capital BDC | $397.72 million | 9.30 | $273.79 million | $1.42 | 9.77 |
| Saratoga Investment | $48.61 million | 7.18 | $28.09 million | $2.34 | 9.27 |
Golub Capital BDC has higher revenue and earnings than Saratoga Investment. Saratoga Investment 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.
Summary
Golub Capital BDC beats Saratoga Investment on 11 of the 16 factors compared between the two stocks.
About Golub Capital BDC
Golub Capital BDC, Inc. (GBDC) is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails. It seeks to invest in the United States. It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.
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.
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