Barings Bdc (NYSE:BBDC – Get Free Report) and Gladstone Capital (NASDAQ:GLAD – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, valuation, analyst recommendations, institutional ownership, profitability, risk and earnings.
Profitability
This table compares Barings Bdc and Gladstone Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Barings Bdc | 32.45% | 10.08% | 4.33% |
| Gladstone Capital | 45.15% | 9.79% | 5.31% |
Dividends
Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 12.3%. Gladstone Capital pays an annual dividend of $1.80 per share and has a dividend yield of 9.2%. Barings Bdc pays out 122.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gladstone Capital pays out 98.4% 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 raised its dividend for 3 consecutive years and Gladstone Capital has raised its dividend for 4 consecutive years.
Volatility and Risk
Valuation & Earnings
This table compares Barings Bdc and Gladstone Capital”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Barings Bdc | $101.66 million | 8.70 | $101.92 million | $0.85 | 9.94 |
| Gladstone Capital | $89.12 million | 4.96 | $58.11 million | $1.83 | 10.68 |
Barings Bdc has higher revenue and earnings than Gladstone Capital. Barings Bdc is trading at a lower price-to-earnings ratio than Gladstone Capital, indicating that it is currently the more affordable of the two stocks.
Analyst Ratings
This is a summary of recent ratings and target prices for Barings Bdc and Gladstone Capital, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Barings Bdc | 0 | 3 | 1 | 0 | 2.25 |
| Gladstone Capital | 0 | 4 | 2 | 0 | 2.33 |
Barings Bdc currently has a consensus price target of $9.50, indicating a potential upside of 12.49%. Gladstone Capital has a consensus price target of $21.67, indicating a potential upside of 10.83%. Given Barings Bdc’s higher possible upside, analysts plainly believe Barings Bdc is more favorable than Gladstone Capital.
Institutional and Insider Ownership
44.1% of Barings Bdc shares are held by institutional investors. Comparatively, 10.7% of Gladstone Capital shares are held by institutional investors. 0.6% of Barings Bdc shares are held by insiders. Comparatively, 3.8% of Gladstone Capital shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock will outperform the market over the long term.
Summary
Gladstone Capital beats Barings Bdc on 10 of the 17 factors compared between the two stocks.
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.
About Gladstone Capital
Gladstone Capital Corporation is a business development company specializing in lower middle market, growth capital, add on acquisitions, change of control, buy & build strategies, debt refinancing, debt investments in senior term loans, revolving loans, secured first and second lien term loans, senior subordinated loans, unitranche loans, junior subordinated loans, and mezzanine loans and equity investments in the form of common stock, preferred stock, limited liability company interests, or warrants. It operates as a business development company. The fund also makes private equity investments in acquisitions, buyouts and recapitalizations, and refinancing existing debts. It targets small and medium-sized companies in United States. It is industry agnostic and seeks to invest in companies engaged in the business services, light and specialty manufacturing, niche industrial products and services, specialty consumer products and services, energy services, transportation and logistics, healthcare and education services, specialty chemicals, media and communications and aerospace and defense. The fund seeks to invest between $7 million and $30 million in companies that have between $20 million and $150 million in sales and EBITDA between $3 million and $25 million. It prefers to acquire minority stakes. It seeks to exit its investments through strategic acquisitions by other industry participants or financial buyers, initial public offerings of common stock, or other capital market transactions.
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