Reviewing Goldman Sachs BDC (GSBD) & Special Opportunities Fund (SPE)

Goldman Sachs BDC (NYSE: GSBD) and Special Opportunities Fund (NYSE:SPE) are both small-cap finance companies, but which is the better stock? We will contrast the two businesses based on the strength of their valuation, dividends, institutional ownership, profitability, analyst recommendations, earnings and risk.

Dividends

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Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 9.4%. Special Opportunities Fund pays an annual dividend of $0.20 per share and has a dividend yield of 1.3%. Goldman Sachs BDC pays out 87.0% 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 2 consecutive years. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares Goldman Sachs BDC and Special Opportunities Fund’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Goldman Sachs BDC $136.78 million 5.64 $49.54 million $2.07 9.29
Special Opportunities Fund N/A N/A N/A N/A N/A

Goldman Sachs BDC has higher revenue and earnings than Special Opportunities Fund.

Analyst Recommendations

This is a summary of current recommendations and price targets for Goldman Sachs BDC and Special Opportunities Fund, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 1 1 2 0 2.25
Special Opportunities Fund 0 0 3 0 3.00

Goldman Sachs BDC currently has a consensus price target of $21.00, indicating a potential upside of 9.20%. Special Opportunities Fund has a consensus price target of $9.67, indicating a potential downside of 35.34%. Given Goldman Sachs BDC’s higher probable upside, analysts plainly believe Goldman Sachs BDC is more favorable than Special Opportunities Fund.

Institutional & Insider Ownership

35.3% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 45.4% of Special Opportunities Fund shares are owned by institutional investors. 0.3% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 22.4% of Special Opportunities Fund shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Profitability

This table compares Goldman Sachs BDC and Special Opportunities Fund’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs BDC 36.22% 11.22% 6.57%
Special Opportunities Fund N/A N/A N/A

Risk and Volatility

Goldman Sachs BDC has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Special Opportunities Fund has a beta of 0.78, meaning that its share price is 22% less volatile than the S&P 500.

Summary

Goldman Sachs BDC beats Special Opportunities Fund on 7 of the 13 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 Special Opportunities Fund

There is no company description available for Special Opportunities Fund.

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