Reviewing Golub Capital BDC (GBDC) & TICC Capital (TICC)

TICC Capital (NASDAQ: TICC) and Golub Capital BDC (NASDAQ:GBDC) are both small-cap financials companies, but which is the superior stock? We will contrast the two companies based on the strength of their analyst recommendations, earnings, dividends, institutional ownership, risk, profitability and valuation.

Risk and Volatility

TICC Capital has a beta of 0.65, indicating that its share price is 35% less volatile than the S&P 500. Comparatively, Golub Capital BDC has a beta of 0.67, indicating that its share price is 33% less volatile than the S&P 500.

Institutional and Insider Ownership

15.9% of TICC Capital shares are held by institutional investors. Comparatively, 40.6% of Golub Capital BDC shares are held by institutional investors. 5.9% of TICC Capital shares are held by company insiders. Comparatively, 10.7% of Golub Capital BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Analyst Ratings

This is a breakdown of recent ratings and price targets for TICC Capital and Golub Capital BDC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
TICC Capital 3 0 1 0 1.50
Golub Capital BDC 0 3 0 0 2.00

TICC Capital currently has a consensus target price of $5.50, indicating a potential downside of 2.31%. Golub Capital BDC has a consensus target price of $19.50, indicating a potential upside of 8.21%. Given Golub Capital BDC’s stronger consensus rating and higher probable upside, analysts plainly believe Golub Capital BDC is more favorable than TICC Capital.

Dividends

TICC Capital pays an annual dividend of $0.80 per share and has a dividend yield of 14.2%. Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 7.1%. TICC Capital pays out 76.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Golub Capital BDC pays out 88.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. TICC Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.

Earnings and Valuation

This table compares TICC Capital and Golub Capital BDC’s revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
TICC Capital $69.28 million 4.18 $110.36 million $1.05 5.36
Golub Capital BDC $137.76 million 7.79 $82.28 million $1.45 12.43

TICC Capital has higher earnings, but lower revenue than Golub Capital BDC. TICC 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.

Profitability

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

Net Margins Return on Equity Return on Assets
TICC Capital 94.98% 7.64% 4.95%
Golub Capital BDC 58.06% 7.90% 4.06%

Summary

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

TICC Capital Company Profile

TICC Capital Corp. is a closed-end, non-diversified management investment company. The Company’s investment objective is to maximize its portfolio’s total return. The Company primarily focuses on seeking current income by investing primarily in corporate debt securities. The Company’s debt investments may include syndicated loans and bilateral loans. The Company holds interests in structured finance investments, including collateralized loan obligation (CLO) investment vehicles that own debt securities. CLO investments may also include warehouse facilities, which are financing structures intended to aggregate loans that may be used to form the basis of a CLO vehicle. The Company may also invest in publicly traded debt and/or equity securities. Its portfolio includes its investments in various industries, such as structured finance, telecommunication services, business services, printing and publishing, and financial intermediaries. TICC Management, LLC is its investment advisor.

Golub Capital BDC Company Profile

Golub Capital BDC, Inc. is an externally managed, non-diversified, closed-end, management investment company. The Company’s investment objective is to generate current income and capital appreciation by investing primarily in senior secured and one stop loans of the United States middle-market companies. It may also selectively invest in second lien and subordinated loans of, and warrants and minority equity securities in the United States middle-market companies. The Company seeks to create a portfolio that includes primarily senior secured and one stop loans by primarily investing in the securities of the United States middle-market companies. It generally invests in securities that have been rated below investment grade by independent rating agencies or that would be rated below investment grade if they were rated. The Company’s investment activities are managed by its investment advisor, GC Advisors LLC (GC Advisors).

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