Golub Capital Bdc (NASDAQ: GBDC) and Thl Credit (NASDAQ:TCRD) are both small-cap finance companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, dividends, analyst recommendations, profitability, earnings, valuation and risk.
Earnings and Valuation
This table compares Golub Capital Bdc and Thl Credit’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Golub Capital Bdc||$137.76 million||7.73||$82.28 million||$1.25||14.26|
|Thl Credit||$78.77 million||3.28||-$7.90 million||$1.21||6.55|
Golub Capital Bdc has higher revenue and earnings than Thl Credit. Thl Credit 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.
This table compares Golub Capital Bdc and Thl Credit’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Golub Capital Bdc||58.64%||7.94%||4.16%|
Golub Capital Bdc pays an annual dividend of $1.28 per share and has a dividend yield of 7.2%. Thl Credit pays an annual dividend of $1.08 per share and has a dividend yield of 13.6%. Golub Capital Bdc pays out 102.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Thl Credit pays out 89.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Thl Credit is clearly the better dividend stock, given its higher yield and lower payout ratio.
Insider and Institutional Ownership
38.7% of Golub Capital Bdc shares are owned by institutional investors. Comparatively, 44.8% of Thl Credit shares are owned by institutional investors. 2.4% of Golub Capital Bdc shares are owned by insiders. Comparatively, 9.4% of Thl Credit shares are owned by 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 and Risk
Golub Capital Bdc has a beta of 0.62, suggesting that its share price is 38% less volatile than the S&P 500. Comparatively, Thl Credit has a beta of 1.04, suggesting that its share price is 4% more volatile than the S&P 500.
This is a summary of current ratings for Golub Capital Bdc and Thl Credit, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Golub Capital Bdc||0||2||1||0||2.33|
Golub Capital Bdc presently has a consensus target price of $20.50, suggesting a potential upside of 14.97%. Thl Credit has a consensus target price of $10.00, suggesting a potential upside of 26.26%. Given Thl Credit’s higher possible upside, analysts clearly believe Thl Credit is more favorable than Golub Capital Bdc.
About Golub Capital Bdc
Golub Capital BDC, Inc. 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. The company seeks to invest in the United States. It primarily invests in senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.
About Thl Credit
THL Credit, Inc. is an externally managed, non-diversified closed-end management investment company. The Company’s investment objective is to generate both current income and capital appreciation, primarily through investments in privately negotiated debt and equity securities of lower middle market companies. The Company is a direct lender to lower middle-market companies and invests primarily in directly originated first lien senior secured loans, including unitranche investments. In certain instances, it also makes second lien secured loans and subordinated, or mezzanine, debt investments, which may include an associated equity component, such as warrants, preferred stock or similar securities, and direct equity investments. Its first lien senior secured loans may be structured as traditional first lien senior secured loans or as unitranche loans. The Company’s investment activities are managed by THL Credit Advisors LLC.
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