Golub Capital BDC (NASDAQ: GBDC) and StoneCastle Financial Corp (NASDAQ:BANX) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their institutional ownership, risk, earnings, dividends, valuation, profitability and analyst recommendations.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Golub Capital BDC and StoneCastle Financial Corp, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Golub Capital BDC 0 3 0 0 2.00
StoneCastle Financial Corp 0 0 4 0 3.00

Golub Capital BDC presently has a consensus target price of $19.50, suggesting a potential upside of 3.61%. StoneCastle Financial Corp has a consensus target price of $22.38, suggesting a potential upside of 8.22%. Given StoneCastle Financial Corp’s stronger consensus rating and higher possible upside, analysts clearly believe StoneCastle Financial Corp is more favorable than Golub Capital BDC.

Earnings and Valuation

This table compares Golub Capital BDC and StoneCastle Financial Corp’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Golub Capital BDC N/A N/A N/A $1.33 14.15
StoneCastle Financial Corp N/A N/A N/A $1.74 11.88

StoneCastle Financial Corp 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.

Dividends

Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.8%. StoneCastle Financial Corp pays an annual dividend of $1.52 per share and has a dividend yield of 7.4%. Golub Capital BDC pays out 96.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. StoneCastle Financial Corp pays out 87.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. StoneCastle Financial Corp is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Golub Capital BDC has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500. Comparatively, StoneCastle Financial Corp has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500.

Insider & Institutional Ownership

41.6% of Golub Capital BDC shares are held by institutional investors. Comparatively, 34.0% of StoneCastle Financial Corp shares are held by institutional investors. 2.4% of Golub Capital BDC shares are held by insiders. Comparatively, 8.0% of StoneCastle Financial Corp shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Golub Capital BDC and StoneCastle Financial Corp’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Golub Capital BDC 53.62% 7.86% 3.95%
StoneCastle Financial Corp 66.25% N/A N/A

Summary

StoneCastle Financial Corp beats Golub Capital BDC on 8 of the 12 factors compared between the two stocks.

About Golub Capital BDC

Golub Capital BDC, Inc. is an externally managed, non-diversified, closed-end, management investment company. The Company’s investment objective is to generate current income and capital appreciation by investing primarily in senior secured and one stop loans of the United States middle-market companies. It may also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in the United States middle-market companies. The Company seeks to create a portfolio that includes primarily senior secured and one stop loans by primarily investing in the securities of the United States middle-market companies. It generally invests in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. The Company’s investment activities are managed by its investment advisor, GC Advisors LLC (GC Advisors).

About StoneCastle Financial Corp

StoneCastle Financial Corp. is a non-diversified, closed-end management investment company. The Company’s primary investment objective is to provide stockholders with current income, and to a lesser extent capital appreciation. The Company generally invests in the senior debt, subordinated debt, preferred shares and common stock of community banks. The Company’s investment portfolio includes term loans, debt securities, trust preferred securities, preferred shares of credit securitization, preferred securities, convertible preferred stock, common stock, exchange traded fund, limited partnership interest and money market fund. The Company invests in bank issuers of various locations, such as California, Colorado, Florida, Georgia, Illinois, Kansas, Maine, Maryland, New Jersey, New York, Ohio, North Carolina, Oklahoma, South Carolina, Texas and West Virginia.

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