Goldman Sachs BDC (NYSE: GSBD) and Safeguard Scientifics (NYSE:SFE) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, dividends, valuation, earnings, profitability and analyst recommendations.

Profitability

This table compares Goldman Sachs BDC and Safeguard Scientifics’ 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%
Safeguard Scientifics N/A -61.90% -42.77%

Analyst Ratings

This is a breakdown of current ratings for Goldman Sachs BDC and Safeguard Scientifics, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 1 4 3 0 2.25
Safeguard Scientifics 0 0 0 0 N/A

Goldman Sachs BDC presently has a consensus price target of $22.18, suggesting a potential upside of 3.79%. Given Goldman Sachs BDC’s higher probable upside, equities research analysts plainly believe Goldman Sachs BDC is more favorable than Safeguard Scientifics.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.4%. Safeguard Scientifics does not pay a dividend. 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.

Insider and Institutional Ownership

36.7% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 77.6% of Safeguard Scientifics shares are owned by institutional investors. 0.3% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 2.7% of Safeguard Scientifics shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Earnings & Valuation

This table compares Goldman Sachs BDC and Safeguard Scientifics’ gross revenue, earnings per share 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 16.57
Safeguard Scientifics N/A N/A -$17.72 million ($4.76) -2.65

Safeguard Scientifics is trading at a lower price-to-earnings ratio than Goldman Sachs BDC, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Goldman Sachs BDC has a beta of 0.85, suggesting that its stock price is 15% less volatile than the S&P 500. Comparatively, Safeguard Scientifics has a beta of 1.3, suggesting that its stock price is 30% more volatile than the S&P 500.

Summary

Goldman Sachs BDC beats Safeguard Scientifics on 7 of the 11 factors compared between the two stocks.

About Goldman Sachs BDC

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.

About Safeguard Scientifics

Safeguard Scientifics, Inc. is engaged in providing capital to technology companies within the fields of healthcare, financial services and digital media. The Company holds interest in companies, which it refers to as partner companies. As of December 31, 2016, the Company held interests in 29 non-consolidated partner companies. The Company offers operational and management support to each of its partner companies. In addition to management and operational support, the Company offers ongoing planning and development assessment. It provides mentoring, advice and guidance to develop partner company management. The Company serves on the boards of directors of its partner companies, working with them to develop and implement strategic and operating plans. It measures and monitors achievement of these plans through regular review of operational and financial performance measurements.

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