Comparing Goldman Sachs BDC (NYSE:GSBD) and Palmer Square Capital BDC (NYSE:PSBD)

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

Dividends

Goldman Sachs BDC pays an annual dividend of $1.28 per share and has a dividend yield of 12.6%. Palmer Square Capital BDC pays an annual dividend of $1.44 per share and has a dividend yield of 12.9%. Goldman Sachs BDC pays out 123.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Palmer Square Capital BDC pays out -1,309.1% of its earnings in the form of a dividend. Palmer Square Capital BDC is clearly the better dividend stock, given its higher yield and lower payout ratio.

Analyst Recommendations

This is a summary of recent ratings and recommmendations for Goldman Sachs BDC and Palmer Square Capital BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Goldman Sachs BDC	1	5	0	0	1.83
Palmer Square Capital BDC	0	4	0	0	2.00

Goldman Sachs BDC currently has a consensus target price of $9.50, suggesting a potential downside of 6.27%. Palmer Square Capital BDC has a consensus target price of $11.75, suggesting a potential upside of 5.57%. Given Palmer Square Capital BDC’s stronger consensus rating and higher possible upside, analysts clearly believe Palmer Square Capital BDC is more favorable than Goldman Sachs BDC.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Goldman Sachs BDC	32.62%	12.23%	5.31%
Palmer Square Capital BDC	-2.55%	10.82%	4.13%

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Goldman Sachs BDC	$365.57 million	3.12	$119.27 million	$1.04	9.75
Palmer Square Capital BDC	$124.39 million	2.79	-$3.17 million	($0.11)	-101.18

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

Institutional & Insider Ownership

28.7% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 6.5% of Palmer Square Capital BDC shares are owned by institutional investors. 0.1% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 1.1% of Palmer Square Capital BDC shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Volatility and Risk

Goldman Sachs BDC has a beta of 0.62, suggesting that its stock price is 38% less volatile than the S&P 500. Comparatively, Palmer Square Capital BDC has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Summary

Goldman Sachs BDC beats Palmer Square Capital BDC on 9 of the 15 factors compared between the two stocks.

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.

About Palmer Square Capital BDC

Palmer Square Capital BDC Inc. is an externally managed, non-diversified closed-end management investment company which primarily lends to and invests in corporate debt securities, including small to large private U.S. companies and has elected to be regulated as a business development company. Palmer Square Capital BDC Inc. is based in MISSION WOODS, Kan.