Goldman Sachs BDC (NYSE: GSBD) and Brookfield Asset Management (NYSE:BAM) are both finance companies, but which is the superior business? We will compare the two businesses based on the strength of their institutional ownership, risk, dividends, valuation, earnings, analyst recommendations and profitability.

Risk & Volatility

Goldman Sachs BDC has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Brookfield Asset Management has a beta of 1.04, meaning that its share price is 4% more volatile than the S&P 500.

Valuation & Earnings

This table compares Goldman Sachs BDC and Brookfield Asset Management’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Goldman Sachs BDC N/A N/A N/A $1.29 17.43
Brookfield Asset Management $30.02 billion 1.34 $8.47 billion $1.28 32.80

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

Institutional and Insider Ownership

36.7% of Goldman Sachs BDC shares are held by institutional investors. Comparatively, 53.7% of Brookfield Asset Management shares are held by institutional investors. 0.3% of Goldman Sachs BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Goldman Sachs BDC and Brookfield Asset Management’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs BDC 35.73% 11.54% 6.67%
Brookfield Asset Management 4.87% 2.10% 0.84%

Dividends

Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.0%. Brookfield Asset Management pays an annual dividend of $0.56 per share and has a dividend yield of 1.3%. Goldman Sachs BDC pays out 139.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Brookfield Asset Management pays out 43.8% of its earnings in the form of a dividend. Goldman Sachs BDC has raised its dividend for 5 consecutive years. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of recent recommendations for Goldman Sachs BDC and Brookfield Asset Management, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 1 4 3 0 2.25
Brookfield Asset Management 0 0 6 0 3.00

Goldman Sachs BDC presently has a consensus target price of $22.18, suggesting a potential downside of 1.33%. Brookfield Asset Management has a consensus target price of $45.92, suggesting a potential upside of 9.35%. Given Brookfield Asset Management’s stronger consensus rating and higher probable upside, analysts clearly believe Brookfield Asset Management is more favorable than Goldman Sachs BDC.

Goldman Sachs BDC Company Profile

Goldman Sachs BDC, Inc. is a closed-end management investment company. The Company is a specialty finance company, which is focused on lending to middle-market companies. The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments. The Company invests primarily in the United States middle-market companies. The Company invests in illiquid securities, including debt and equity investments, of middle-market companies. As of December 31, 2016, its portfolio included first lien/senior secured debt, first lien/last-out unitranche, second lien/senior secured debt, unsecured debt, preferred stock, common stock, and investment funds and vehicles.

Brookfield Asset Management Company Profile

Brookfield Asset Management Inc. is an alternative asset manager. The Company operates in eight segments. The Asset Management segment manages its listed partnerships, private funds and public markets on behalf of its clients. The Property segment includes the ownership, operation and development of office, retail and other properties. The Renewable power segment operates and develops hydroelectric, wind power and other generating facilities. The Infrastructure segment includes the ownership, operation and development of utilities and agricultural operations, among others. The Residential development segment includes homebuilding, condominium development and land development. The Service activities segment includes construction management and contracting services and property services. The Private equity segment includes the investments and operations overseen by its private equity group. The Corporate activities segment includes the allocation of capital to its operating platforms.

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