Trinity Capital (NASDAQ:TRIN) and Golub Capital BDC (NASDAQ:GBDC) Financial Analysis

Trinity Capital (NASDAQ:TRIN) and Golub Capital BDC (NASDAQ:GBDC) are both finance companies, but which is the better stock? We will compare the two businesses based on the strength of their institutional ownership, risk, valuation, earnings, analyst recommendations, profitability and dividends.

Profitability

This table compares Trinity Capital and Golub Capital BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Trinity Capital	51.88%	15.72%	7.08%
Golub Capital BDC	42.81%	10.87%	4.87%

Volatility & Risk

Trinity Capital has a beta of 0.54, meaning that its stock price is 46% less volatile than the S&P 500. Comparatively, Golub Capital BDC has a beta of 0.48, meaning that its stock price is 52% less volatile than the S&P 500.

Dividends

Trinity Capital pays an annual dividend of $2.04 per share and has a dividend yield of 12.7%. Golub Capital BDC pays an annual dividend of $1.56 per share and has a dividend yield of 10.6%. Trinity Capital pays out 91.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Golub Capital BDC pays out 109.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Trinity Capital has increased its dividend for 1 consecutive years. Trinity Capital is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings and target prices for Trinity Capital and Golub Capital BDC, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Trinity Capital	1	1	2	0	2.25
Golub Capital BDC	0	1	2	0	2.67

Trinity Capital currently has a consensus price target of $15.75, indicating a potential downside of 2.23%. Golub Capital BDC has a consensus price target of $15.00, indicating a potential upside of 1.63%. Given Golub Capital BDC’s stronger consensus rating and higher probable upside, analysts clearly believe Golub Capital BDC is more favorable than Trinity Capital.

Valuation and Earnings

This table compares Trinity Capital and Golub Capital BDC”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Trinity Capital	$203.47 million	5.57	$115.60 million	$2.23	7.22
Golub Capital BDC	$724.68 million	5.43	$273.79 million	$1.42	10.39

Golub Capital BDC has higher revenue and earnings than Trinity Capital. Trinity Capital is trading at a lower price-to-earnings ratio than Golub Capital BDC, indicating that it is currently the more affordable of the two stocks.

Institutional and Insider Ownership

24.6% of Trinity Capital shares are owned by institutional investors. Comparatively, 42.4% of Golub Capital BDC shares are owned by institutional investors. 5.3% of Trinity Capital shares are owned by insiders. Comparatively, 3.6% of Golub Capital BDC shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Summary

Trinity Capital beats Golub Capital BDC on 10 of the 16 factors compared between the two stocks.

About Trinity Capital

Trinity Capital Inc. is a business development company. It is a venture capital firm specializing in venture debt to growth stage companies looking for loans and/or equipment financing. Trinity Capital Inc. was founded in 2019 is based in Phoenix, Arizona with additional offices in the United States.

About Golub Capital BDC

Golub Capital BDC, Inc. (GBDC) is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails. It seeks to invest in the United States. It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.