Goldman Sachs BDC (GSBD) versus Waddell & Reed Financial (WDR) Critical Survey
Waddell & Reed Financial (NYSE: WDR) and Goldman Sachs BDC (NYSE:GSBD) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their dividends, earnings, profitability, institutional ownership, analyst recommendations, valuation and risk.
Insider & Institutional Ownership
96.8% of Waddell & Reed Financial shares are owned by institutional investors. Comparatively, 36.6% of Goldman Sachs BDC shares are owned by institutional investors. 3.8% of Waddell & Reed Financial shares are owned by insiders. Comparatively, 0.3% of Goldman Sachs BDC shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.
This is a breakdown of current recommendations and price targets for Waddell & Reed Financial and Goldman Sachs BDC, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Waddell & Reed Financial||5||2||0||0||1.29|
|Goldman Sachs BDC||0||4||3||0||2.43|
Waddell & Reed Financial presently has a consensus target price of $18.43, indicating a potential downside of 4.71%. Goldman Sachs BDC has a consensus target price of $22.60, indicating a potential upside of 2.08%. Given Goldman Sachs BDC’s stronger consensus rating and higher possible upside, analysts clearly believe Goldman Sachs BDC is more favorable than Waddell & Reed Financial.
Risk & Volatility
Waddell & Reed Financial has a beta of 2.09, suggesting that its share price is 109% more volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500.
This table compares Waddell & Reed Financial and Goldman Sachs BDC’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Waddell & Reed Financial||10.10%||16.81%||10.22%|
|Goldman Sachs BDC||32.19%||11.34%||6.65%|
Valuation & Earnings
This table compares Waddell & Reed Financial and Goldman Sachs BDC’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||NetIncome||Earnings Per Share||Price/Earnings Ratio|
|Waddell & Reed Financial||$1.24 billion||1.30||$146.90 million||$1.39||13.91|
|Goldman Sachs BDC||$125.11 million||7.10||$40.65 million||$1.12||19.77|
Waddell & Reed Financial has higher revenue and earnings than Goldman Sachs BDC. Waddell & Reed Financial 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.
Waddell & Reed Financial pays an annual dividend of $1.84 per share and has a dividend yield of 9.5%. Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.1%. Waddell & Reed Financial pays out 132.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Goldman Sachs BDC pays out 160.7% 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 has raised its dividend for 6 consecutive years. Waddell & Reed Financial is clearly the better dividend stock, given its higher yield and lower payout ratio.
Waddell & Reed Financial beats Goldman Sachs BDC on 11 of the 17 factors compared between the two stocks.
Waddell & Reed Financial Company Profile
Waddell & Reed Financial, Inc., incorporated on December 24, 1981, is a holding company. The Company is a mutual fund and asset management company. The Company provides investment management, investment advisory, investment product underwriting, and distribution and shareholder services administration to Waddell & Reed Advisors group of mutual funds (the Advisors Funds), Ivy Funds, Ivy Funds Variable Insurance Portfolios (Ivy Funds VIP), InvestEd Portfolios and 529 college savings plan (collectively, the Funds), and the Ivy Global Investors Fund SICAV (the SICAV) and its Ivy Global Investors sub-funds (the IGI Funds), and institutional and separately managed accounts. The Company operates its business through a distribution network. Its retail products are distributed through third parties, such as other broker-dealers, registered investment advisors and various retirement platforms or through associated independent contractor financial advisors.
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.
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