Analyzing Barings BDC (NYSE:BBDC) and Great Elm Capital (NYSE:GECC)

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Barings BDC (NYSE:BBDC) and Great Elm Capital (NASDAQ:GECC) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their dividends, analyst recommendations, earnings, institutional ownership, valuation, profitability and risk.

Dividends

Barings BDC pays an annual dividend of $0.48 per share and has a dividend yield of 4.8%. Great Elm Capital pays an annual dividend of $1.00 per share and has a dividend yield of 11.3%. Great Elm Capital pays out 69.4% of its earnings in the form of a dividend.

Risk and Volatility

Barings BDC has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500. Comparatively, Great Elm Capital has a beta of 0.72, meaning that its stock price is 28% less volatile than the S&P 500.

Insider & Institutional Ownership

40.6% of Barings BDC shares are held by institutional investors. Comparatively, 15.2% of Great Elm Capital shares are held by institutional investors. 0.3% of Barings BDC shares are held by insiders. Comparatively, 1.4% of Great Elm Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Valuation & Earnings

This table compares Barings BDC and Great Elm Capital’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Barings BDC $80.22 million 6.32 -$114.28 million N/A N/A
Great Elm Capital $27.75 million 3.29 -$9.01 million $1.44 6.13

Great Elm Capital has lower revenue, but higher earnings than Barings BDC.

Profitability

This table compares Barings BDC and Great Elm Capital’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Barings BDC -131.87% -0.80% -0.40%
Great Elm Capital 11.68% 11.94% 4.97%

Analyst Recommendations

This is a breakdown of current recommendations for Barings BDC and Great Elm Capital, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Barings BDC 0 0 4 0 3.00
Great Elm Capital 0 0 0 0 N/A

Barings BDC presently has a consensus price target of $11.20, suggesting a potential upside of 13.16%. Given Barings BDC’s higher possible upside, analysts clearly believe Barings BDC is more favorable than Great Elm Capital.

Barings BDC Company Profile

Barings BDC, Inc. (NYSE:BBDC) is a business development company specializing in private equity and mezzanine investments. It focuses on leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. The firm prefers to make investments in many business sectors including manufacturing, distribution, transportation, energy, communications, health services, restaurants, media, and others. It primarily invests in companies located throughout the United States, with an emphasis on the Southeast and Midatlantic. The firm makes equity investments between $1 million and $25 million and debt investments between $5 million and $30 million per transaction, in companies having annual revenues between $20 million and $200 million and EBITDA between $3 million and $35 million and can also co-invest. It typically makes investments between $5 million and $35 million. It primarily invests in senior subordinated debt securities secured by second lien security interests in portfolio company assets, coupled with equity interests. The firm also invests in senior debt securities secured by first lien security interests in portfolio companies. Triangle Capital Corporation was incorporated on October 10, 2006 and is based in Raleigh, North Carolina.

Great Elm Capital Company Profile

Great Elm Capital Corporation is a business development company which specializes in loan and mezzanine, middle market investments. The fund prefers to invest in media, commercial services and supplies, healthcare, telecommunication services, communications equipment. It typically makes equity investments between $3 million and $10 million in companies with revenues between $3 million and $75 million.

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