StoneCastle Financial Corp (NASDAQ: BANX) and Golub Capital BDC (NASDAQ:GBDC) are both small-cap finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their risk, earnings, analyst recommendations, dividends, profitability, institutional ownership and valuation.
This table compares StoneCastle Financial Corp and Golub Capital BDC’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|StoneCastle Financial Corp||66.25%||N/A||N/A|
|Golub Capital BDC||53.62%||7.86%||3.95%|
Risk & Volatility
StoneCastle Financial Corp has a beta of 0.21, meaning that its share price is 79% less volatile than the S&P 500. Comparatively, Golub Capital BDC has a beta of 0.68, meaning that its share price is 32% less volatile than the S&P 500.
Earnings and Valuation
This table compares StoneCastle Financial Corp and Golub Capital BDC’s revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|StoneCastle Financial Corp||N/A||N/A||N/A||$1.74||11.90|
|Golub Capital BDC||N/A||N/A||N/A||$1.33||14.15|
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.
StoneCastle Financial Corp pays an annual dividend of $1.52 per share and has a dividend yield of 7.3%. Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.8%. 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. 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 is clearly the better dividend stock, given its higher yield and lower payout ratio.
Institutional and Insider Ownership
34.0% of StoneCastle Financial Corp shares are held by institutional investors. Comparatively, 41.6% of Golub Capital BDC shares are held by institutional investors. 8.0% of StoneCastle Financial Corp shares are held by company insiders. Comparatively, 2.4% of Golub Capital 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.
This is a breakdown of recent ratings and recommmendations for StoneCastle Financial Corp and Golub Capital BDC, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|StoneCastle Financial Corp||0||0||4||0||3.00|
|Golub Capital BDC||0||3||0||0||2.00|
StoneCastle Financial Corp currently has a consensus target price of $22.38, indicating a potential upside of 8.09%. Golub Capital BDC has a consensus target price of $19.50, indicating a potential upside of 3.61%. Given StoneCastle Financial Corp’s stronger consensus rating and higher possible upside, equities analysts plainly believe StoneCastle Financial Corp is more favorable than Golub Capital BDC.
StoneCastle Financial Corp beats Golub Capital BDC on 8 of the 13 factors compared between the two stocks.
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.
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).
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