Golub Capital BDC (GBDC) versus Oaktree Strategic Income (OCSI) Financial Analysis

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

Valuation & Earnings

This table compares Golub Capital BDC and Oaktree Strategic Income’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Golub Capital BDC $137.76 million 8.26 $82.28 million $1.25 15.18
Oaktree Strategic Income $46.57 million 5.54 -$8.76 million $0.76 11.51

Golub Capital BDC has higher revenue and earnings than Oaktree Strategic Income. Oaktree Strategic Income 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 Golub Capital BDC and Oaktree Strategic Income’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Golub Capital BDC 60.34% 7.92% 4.20%
Oaktree Strategic Income -4.80% 6.75% 3.28%

Insider and Institutional Ownership

38.5% of Golub Capital BDC shares are held by institutional investors. Comparatively, 27.9% of Oaktree Strategic Income shares are held by institutional investors. 2.4% of Golub Capital BDC shares are held by company insiders. Comparatively, 0.4% of Oaktree Strategic Income shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Volatility & Risk

Golub Capital BDC has a beta of 0.63, suggesting that its share price is 37% less volatile than the S&P 500. Comparatively, Oaktree Strategic Income has a beta of 0.25, suggesting that its share price is 75% less volatile than the S&P 500.

Dividends

Golub Capital BDC pays an annual dividend of $1.28 per share and has a dividend yield of 6.7%. Oaktree Strategic Income pays an annual dividend of $0.58 per share and has a dividend yield of 6.6%. Golub Capital BDC pays out 102.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Oaktree Strategic Income pays out 76.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Golub Capital BDC has increased its dividend for 2 consecutive years. Golub Capital BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Analyst Ratings

This is a summary of current ratings for Golub Capital BDC and Oaktree Strategic Income, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Golub Capital BDC 0 1 1 0 2.50
Oaktree Strategic Income 0 0 0 0 N/A

Golub Capital BDC presently has a consensus price target of $20.50, indicating a potential upside of 8.07%. Given Golub Capital BDC’s higher possible upside, equities analysts clearly believe Golub Capital BDC is more favorable than Oaktree Strategic Income.

Summary

Golub Capital BDC beats Oaktree Strategic Income on 15 of the 16 factors compared between the two stocks.

Golub Capital BDC Company Profile

Golub Capital BDC, Inc. is a business development company and operates as an externally managed closed-end non-diversified management investment company. It invests in debt and minority equity investments in middle-market companies that are, in most cases, sponsored by private equity investors. The company seeks to invest in the United States. It primarily invests in senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.

Oaktree Strategic Income Company Profile

Oaktree Strategic Income Corporation, formerly Fifth Street Senior Floating Rate Corp., is a closed-end, non-diversified management investment company. The Company operates as a specialty finance company. The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments while seeking to preserve its capital. The Company invests in senior secured loans, including first lien, unitranche and second lien debt instruments. The Company may also invest in unsecured loans, including subordinated loans, issued by private middle market companies, and senior and subordinated loans issued by public companies and equity investments. The senior loans that the Company targets have final maturities of 4 to 7 years. The Company seeks to invest in senior loans made primarily to private middle market companies. The Company’s investment advisor is Oaktree Capital Management, L.P.

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