Goldman Sachs BDC (GSBD) and Legg Mason (LM) Financial Comparison
Legg Mason (NYSE: LM) and Goldman Sachs BDC (NYSE:GSBD) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their dividends, analyst recommendations, valuation, profitability, earnings, institutional ownership and risk.
Earnings and Valuation
This table compares Legg Mason and Goldman Sachs BDC’s top-line revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Legg Mason||$2.98 billion||1.20||$572.31 million||$2.41||15.85|
|Goldman Sachs BDC||N/A||N/A||N/A||$1.29||16.90|
Legg Mason has higher revenue and earnings than Goldman Sachs BDC. Legg Mason 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.
Legg Mason pays an annual dividend of $1.12 per share and has a dividend yield of 2.9%. Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.3%. Legg Mason pays out 46.5% of its earnings in the form of 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. Goldman Sachs BDC has raised its dividend for 7 consecutive years. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.
Institutional and Insider Ownership
82.3% of Legg Mason shares are owned by institutional investors. Comparatively, 36.7% of Goldman Sachs BDC shares are owned by institutional investors. 12.7% of Legg Mason 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 large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
This is a breakdown of recent ratings for Legg Mason and Goldman Sachs BDC, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Goldman Sachs BDC||1||4||3||0||2.25|
Legg Mason presently has a consensus target price of $42.50, indicating a potential upside of 11.23%. Goldman Sachs BDC has a consensus target price of $22.18, indicating a potential upside of 1.74%. Given Legg Mason’s higher possible upside, analysts clearly believe Legg Mason is more favorable than Goldman Sachs BDC.
Volatility & Risk
Legg Mason has a beta of 2.21, indicating that its share price is 121% more 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 table compares Legg Mason 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%|
Legg Mason beats Goldman Sachs BDC on 9 of the 15 factors compared between the two stocks.
About Legg Mason
Legg Mason, Inc. is a holding company. The Company and its subsidiaries are principally engaged in providing asset management and related financial services to individuals, institutions, corporations and municipalities. The Company operates through Global Asset Management segment. Global Asset Management provides investment advisory services to institutional and individual clients and to the Company-sponsored investment funds. The Company, through its subsidiaries, provides investment management and related services to institutional and individual clients, Company-sponsored investment funds and retail separately managed account programs. It offers its products and services directly and through various financial intermediaries. It has operations principally in the United States and the United Kingdom and also has offices in Australia, Bahamas, Brazil, Canada, Chile, China, Dubai, France, Germany, Italy, Japan, Luxembourg, Poland, Singapore, Spain, Switzerland and Taiwan.
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.
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