Financial Survey: Barings Bdc (NYSE:BBDC) versus FS KKR Capital (NYSE:FSK)

FS KKR Capital (NYSE:FSK) and Barings Bdc (NYSE:BBDC) are both finance companies, but which is the better investment? We will contrast the two businesses based on the strength of their institutional ownership, risk, dividends, profitability, analyst recommendations, earnings and valuation.

Valuation & Earnings

This table compares FS KKR Capital and Barings Bdc”s gross 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	$0.97	15.04
Barings Bdc	$286.17 million	3.37	$110.29 million	$0.97	9.45

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

Profitability

This table compares FS KKR Capital and Barings Bdc’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
FS KKR Capital	17.24%	5.63%	2.49%
Barings Bdc	36.01%	10.11%	4.30%

Institutional and Insider Ownership

36.3% of FS KKR Capital shares are owned by institutional investors. Comparatively, 44.1% of Barings Bdc shares are owned by institutional investors. 0.3% of FS KKR Capital shares are owned by insiders. Comparatively, 0.5% of Barings Bdc shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Risk & Volatility

FS KKR Capital has a beta of 0.84, suggesting that its share price is 16% less volatile than the S&P 500. Comparatively, Barings Bdc has a beta of 0.61, suggesting that its share price is 39% less volatile than the S&P 500.

Analyst Ratings

This is a summary of recent ratings for FS KKR Capital and Barings Bdc, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
FS KKR Capital	0	8	0	0	2.00
Barings Bdc	0	2	2	0	2.50

FS KKR Capital currently has a consensus price target of $17.50, indicating a potential upside of 19.98%. Barings Bdc has a consensus price target of $9.67, indicating a potential upside of 5.47%. Given FS KKR Capital’s higher possible upside, research analysts plainly believe FS KKR Capital is more favorable than Barings Bdc.

Dividends

FS KKR Capital pays an annual dividend of $2.56 per share and has a dividend yield of 17.6%. Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 11.3%. FS KKR Capital pays out 263.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc pays out 107.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has increased its dividend for 3 consecutive years.

Summary

Barings Bdc beats FS KKR Capital on 9 of the 15 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 Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.