Critical Comparison: Apollo Investment Corporation (AINV) and Golub Capital BDC (GBDC)

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

Analyst Ratings

This is a breakdown of recent ratings and recommmendations for Golub Capital BDC and Apollo Investment Corporation, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Golub Capital BDC 0 3 0 0 2.00
Apollo Investment Corporation 1 4 4 0 2.33

Golub Capital BDC currently has a consensus price target of $19.50, indicating a potential upside of 2.69%. Apollo Investment Corporation has a consensus price target of $6.41, indicating a potential upside of 5.37%. Given Apollo Investment Corporation’s stronger consensus rating and higher possible upside, analysts plainly believe Apollo Investment Corporation is more favorable than Golub Capital BDC.

Dividends

Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.7%. Apollo Investment Corporation pays an annual dividend of $0.60 per share and has a dividend yield of 9.9%. Golub Capital BDC pays out 96.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Apollo Investment Corporation pays out 166.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation and Earnings

This table compares Golub Capital BDC and Apollo Investment Corporation’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Golub Capital BDC $127.87 million 8.83 $69.20 million $1.33 14.28
Apollo Investment Corporation $279.86 million 4.75 $18.37 million $0.36 16.89

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

Profitability

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

Net Margins Return on Equity Return on Assets
Golub Capital BDC 53.62% 7.86% 3.95%
Apollo Investment Corporation 29.87% 9.51% 5.65%

Volatility and Risk

Golub Capital BDC has a beta of 0.67, meaning that its stock price is 33% less volatile than the S&P 500. Comparatively, Apollo Investment Corporation has a beta of 0.93, meaning that its stock price is 7% less volatile than the S&P 500.

Insider and Institutional Ownership

39.9% of Golub Capital BDC shares are held by institutional investors. Comparatively, 46.1% of Apollo Investment Corporation shares are held by institutional investors. 2.4% of Golub Capital BDC shares are held by insiders. Comparatively, 0.3% of Apollo Investment Corporation shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Summary

Apollo Investment Corporation beats Golub Capital BDC on 9 of the 16 factors compared between the two stocks.

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).

Apollo Investment Corporation Company Profile

Apollo Investment Corporation is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation. It invests primarily in various forms of debt investments, including secured and unsecured debt, loan investments and/or equity in private middle-market companies. It may also invest in the securities of public companies and in structured products and other investments, such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). Its portfolio also includes equity interests, such as common stock, preferred stock, warrants or options. It invests in investments in the United States secured and unsecured loans, other debt securities and equity, and may also invests a portion of the portfolio in other investment opportunities, including foreign securities and structured products. Apollo Investment Management, L.P. is the investment advisor of the Company.

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