Golub Capital BDC (NASDAQ: GBDC) and Capitala Finance (NASDAQ:CPTA) are both small-cap financials companies, but which is the better investment? We will contrast the two businesses based on the strength of their analyst recommendations, dividends, earnings, profitability, institutional ownership, valuation and risk.
Risk & Volatility
Golub Capital BDC has a beta of 0.65, suggesting that its stock price is 35% less volatile than the S&P 500. Comparatively, Capitala Finance has a beta of 1.06, suggesting that its stock price is 6% more volatile than the S&P 500.
Golub Capital BDC pays an annual dividend of $0.96 per share and has a dividend yield of 5.3%. Capitala Finance pays an annual dividend of $1.00 per share and has a dividend yield of 14.2%. Golub Capital BDC pays out 65.8% of its earnings in the form of a dividend. Capitala Finance pays out 909.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
This is a summary of recent ratings and recommmendations for Golub Capital BDC and Capitala Finance, as reported by MarketBeat.
|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 $20.17, suggesting a potential upside of 12.04%. Capitala Finance has a consensus target price of $13.50, suggesting a potential upside of 91.22%. Given Capitala Finance’s higher probable upside, analysts clearly believe Capitala Finance is more favorable than Golub Capital BDC.
Valuation and Earnings
This table compares Golub Capital BDC and Capitala Finance’s gross revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Golub Capital BDC||$137.76 million||7.81||$82.28 million||$1.46||12.33|
|Capitala Finance||$68.31 million||1.65||$9.15 million||$0.11||64.19|
Golub Capital BDC has higher revenue and earnings than Capitala Finance. Golub Capital BDC is trading at a lower price-to-earnings ratio than Capitala Finance, indicating that it is currently the more affordable of the two stocks.
This table compares Golub Capital BDC and Capitala Finance’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%|
Insider and Institutional Ownership
38.3% of Golub Capital BDC shares are held by institutional investors. Comparatively, 17.5% of Capitala Finance shares are held by institutional investors. 10.7% of Golub Capital BDC shares are held by insiders. Comparatively, 8.4% of Capitala Finance shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Golub Capital BDC beats Capitala Finance on 11 of the 15 factors compared between the two stocks.
Golub Capital BDC Company Profile
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).
Capitala Finance Company Profile
Capitala Finance Corp. 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 through debt and equity investments. Both directly and through its subsidiaries that are licensed by the United States Small Business Administration (SBA), the Company offers financing to business owners, management teams and financial sponsors for change of ownership transactions, recapitalizations, strategic acquisitions, business expansion and other growth initiatives. The Company provides capital to lower and traditional middle-market companies in the United States, with a non-exclusive emphasis on the Southeast, Southwest and Mid-Atlantic regions. The Company invests in first lien, second lien and subordinated loans. The Company’s investment advisor is Capitala Investment Advisors, LLC.
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