Goldman Sachs BDC (NYSE:GSBD) versus FS KKR Capital (NYSE:FSK) Head-To-Head Analysis

FS KKR Capital (NYSE:FSK) and Goldman Sachs BDC (NYSE:GSBD) are both finance companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, profitability, dividends, risk, analyst recommendations, earnings and institutional ownership.

Profitability

This table compares FS KKR Capital and Goldman Sachs BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS KKR Capital	31.53%	11.78%	5.27%
Goldman Sachs BDC	12.38%	15.05%	6.64%

Institutional and Insider Ownership

36.3% of FS KKR Capital shares are held by institutional investors. Comparatively, 28.7% of Goldman Sachs BDC shares are held by institutional investors. 0.2% of FS KKR Capital shares are held by company insiders. Comparatively, 0.1% of Goldman Sachs BDC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares FS KKR Capital and Goldman Sachs BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
FS KKR Capital	$1.72 billion	N/A	$585.00 million	$1.90	10.78
Goldman Sachs BDC	$434.37 million	2.98	$62.87 million	$0.45	24.56

FS KKR Capital has higher revenue and earnings than Goldman Sachs BDC. FS KKR Capital 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

FS KKR Capital has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.75, meaning that its stock price is 25% less volatile than the S&P 500.

Analyst Recommendations

This is a summary of recent recommendations and price targets for FS KKR Capital and Goldman Sachs BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS KKR Capital	1	5	0	0	1.83
Goldman Sachs BDC	1	1	0	0	1.50

FS KKR Capital currently has a consensus target price of $19.50, indicating a potential downside of 4.79%. Goldman Sachs BDC has a consensus target price of $12.00, indicating a potential upside of 8.60%. Given Goldman Sachs BDC’s higher probable upside, analysts plainly believe Goldman Sachs BDC is more favorable than FS KKR Capital.

Dividends

FS KKR Capital pays an annual dividend of $2.56 per share and has a dividend yield of 12.5%. Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 11.6%. FS KKR Capital pays out 134.7% 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 pays out 284.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. FS KKR Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Summary

FS KKR Capital beats Goldman Sachs BDC on 10 of the 14 factors compared between the two stocks.

About FS KKR Capital

FS KKR Capital Corp. is a business development company specializing in investments in debt securities. It provides customized credit solutions to private middle market U.S. companies. It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies. It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments. It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans. In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration. It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor. Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities. The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans. It seeks to invest in small and middle-market companies based in United States. The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion. It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment. It seeks to exit from securities by selling them in a privately negotiated over- the- counter market. For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.

About Goldman Sachs BDC

Goldman Sachs BDC, Inc. is a business development company specializing in middle market and mezzanine investment in private companies. It seeks to make capital appreciation through direct originations of secured debt, senior secured debt, junior secured debt, including first lien, first lien/last-out unitranche and second lien debt, unsecured debt, including mezzanine debt and, to a lesser extent, investments in equities. The fund primarily invests in United States. It seeks to invest between $10 million and $75 million in companies with EBITDA between $5 million and $75 million annually.