Head-To-Head Analysis: Main Street Capital (NYSE:MAIN) and Goldman Sachs BDC (NYSE:GSBD)

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

Dividends

Main Street Capital pays an annual dividend of $3.06 per share and has a dividend yield of 4.8%. Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 12.6%. Main Street Capital pays out 50.4% of its earnings in the form of a dividend. Goldman Sachs BDC pays out 101.6% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Main Street Capital has increased its dividend for 4 consecutive years.

Volatility & Risk

Main Street Capital has a beta of 0.87, meaning that its share price is 13% less volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.73, meaning that its share price is 27% less volatile than the S&P 500.

Valuation & Earnings

This table compares Main Street Capital and Goldman Sachs BDC”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Main Street Capital	$623.14 million	9.17	$508.08 million	$6.07	10.53
Goldman Sachs BDC	$434.37 million	2.67	$62.87 million	$1.26	8.07

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

Insider & Institutional Ownership

20.3% of Main Street Capital shares are owned by institutional investors. Comparatively, 28.7% of Goldman Sachs BDC shares are owned by institutional investors. 4.0% of Main Street Capital shares are owned by insiders. Comparatively, 0.1% of Goldman Sachs BDC shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Main Street Capital	96.16%	12.70%	6.85%
Goldman Sachs BDC	36.17%	13.95%	6.17%

Analyst Recommendations

This is a summary of current recommendations for Main Street Capital and Goldman Sachs BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Main Street Capital	0	4	1	1	2.50
Goldman Sachs BDC	2	0	0	0	1.00

Main Street Capital presently has a consensus price target of $61.20, indicating a potential downside of 4.23%. Goldman Sachs BDC has a consensus price target of $10.00, indicating a potential downside of 1.62%. Given Goldman Sachs BDC’s higher possible upside, analysts clearly believe Goldman Sachs BDC is more favorable than Main Street Capital.

Summary

Main Street Capital beats Goldman Sachs BDC on 14 of the 18 factors compared between the two stocks.

About Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.

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.