Garrison Capital (NASDAQ: GARS) and Goldman Sachs BDC (NYSE:GSBD) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their analyst recommendations, valuation, institutional ownership, dividends, earnings, profitability and risk.
Volatility and Risk
Garrison Capital has a beta of 0.24, indicating that its share price is 76% less volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.85, indicating that its share price is 15% less volatile than the S&P 500.
This is a breakdown of recent recommendations for Garrison Capital and Goldman Sachs BDC, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Goldman Sachs BDC||1||4||3||0||2.25|
Garrison Capital presently has a consensus price target of $10.17, suggesting a potential upside of 23.38%. Goldman Sachs BDC has a consensus price target of $22.18, suggesting a potential upside of 3.98%. Given Garrison Capital’s higher probable upside, equities research analysts clearly believe Garrison Capital is more favorable than Goldman Sachs BDC.
Garrison Capital pays an annual dividend of $1.12 per share and has a dividend yield of 13.6%. Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.4%. 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.
This table compares Garrison Capital and Goldman Sachs BDC’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%|
Insider and Institutional Ownership
22.0% of Garrison Capital shares are owned by institutional investors. Comparatively, 36.7% of Goldman Sachs BDC shares are owned by institutional investors. 5.8% of Garrison Capital shares are owned by company insiders. Comparatively, 0.3% of Goldman Sachs BDC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
Valuation & Earnings
This table compares Garrison Capital and Goldman Sachs BDC’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||16.54|
Goldman Sachs BDC beats Garrison Capital on 8 of the 12 factors compared between the two stocks.
Garrison Capital Company Profile
Garrison Capital Inc. is a managed, closed-end, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation by making investments primarily in debt securities and loans of the United States-based middle-market companies, which it defines as those having annual earnings before interest, taxes and depreciation, or EBITDA, of certain amount. It invests or provides direct lending in first lien senior secured loans, second lien senior secured loans, one-stop senior secured loans or unitranche loans, subordinated or mezzanine loans, unsecured consumer loans and to a lesser extent, selected equity co-investments in middle-market companies. The Company intends to generate risk-adjusted net returns by assembling a portfolio of investments. The Company’s investment advisor is Garrison Capital Advisers LLC.
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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