Franklin Resources (BEN) versus Goldman Sachs BDC (GSBD) Head-To-Head Analysis

Goldman Sachs BDC (NYSE: GSBD) and Franklin Resources (NYSE:BEN) are both finance companies, but which is the better business? We will compare the two businesses based on the strength of their valuation, institutional ownership, risk, dividends, analyst recommendations, profitability and earnings.

Volatility & Risk

Goldman Sachs BDC has a beta of 0.85, meaning that its share price is 15% less volatile than the S&P 500. Comparatively, Franklin Resources has a beta of 1.73, meaning that its share price is 73% more volatile than the S&P 500.

Analyst Ratings

This is a summary of current recommendations for Goldman Sachs BDC and Franklin Resources, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 1 4 3 0 2.25
Franklin Resources 3 6 1 0 1.80

Goldman Sachs BDC presently has a consensus target price of $22.18, suggesting a potential downside of 0.63%. Franklin Resources has a consensus target price of $42.22, suggesting a potential downside of 1.23%. Given Goldman Sachs BDC’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Goldman Sachs BDC is more favorable than Franklin Resources.

Profitability

This table compares Goldman Sachs BDC and Franklin Resources’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Goldman Sachs BDC 35.73% 11.54% 6.67%
Franklin Resources 27.30% 13.96% 10.41%

Valuation & Earnings

This table compares Goldman Sachs BDC and Franklin Resources’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Goldman Sachs BDC N/A N/A N/A $1.29 17.30
Franklin Resources $6.39 billion 3.73 $2.31 billion $3.06 13.97

Franklin Resources has higher revenue and earnings than Goldman Sachs BDC. Franklin Resources 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.

Dividends

Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.1%. Franklin Resources pays an annual dividend of $0.80 per share and has a dividend yield of 1.9%. Goldman Sachs BDC pays out 139.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Resources pays out 26.1% of its earnings in the form of a dividend. Goldman Sachs BDC has raised its dividend for 35 consecutive years. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Insider & Institutional Ownership

36.9% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 45.8% of Franklin Resources shares are owned by institutional investors. 0.3% of Goldman Sachs BDC shares are owned by company insiders. Comparatively, 21.6% of Franklin Resources shares are owned 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.

Summary

Franklin Resources beats Goldman Sachs BDC on 9 of the 15 factors compared between the two stocks.

Goldman Sachs BDC Company Profile

Goldman Sachs BDC, Inc. is a closed-end management investment company. The Company is a specialty finance company, which is focused on lending to middle-market companies. The Company’s investment objective is to generate current income and, to a lesser extent, capital appreciation primarily through direct originations of secured debt, including first lien, including first lien, unitranche, including last out portions of such loans, and second lien debt, and unsecured debt, including mezzanine debt, as well as through select equity investments. The Company invests primarily in the United States middle-market companies. The Company invests in illiquid securities, including debt and equity investments, of middle-market companies. As of December 31, 2016, its portfolio included first lien/senior secured debt, first lien/last-out unitranche, second lien/senior secured debt, unsecured debt, preferred stock, common stock, and investment funds and vehicles.

Franklin Resources Company Profile

Franklin Resources, Inc. is a holding company. The Company, along with its subsidiaries, operates as Franklin Templeton Investments. It is a global investment management company that provides investment management and related services to retail, institutional and high net-worth clients in jurisdictions around the world. The Company offers its investment products and services under the Franklin, Templeton, Franklin Mutual Series, Franklin Bissett, Fiduciary Trust, Darby, Balanced Equity Management, K2 and LibertyShares brand names. Its products include investment funds and institutional, high net-worth and separately managed accounts (collectively, sponsored investment products (SIPs)). It offers various types of SIPs, such as the United States funds, cross-border funds, local/regional funds, and other managed accounts, alternative investment products and trusts. Its investment funds include the United States-registered funds, non-United States-registered funds and unregistered funds.

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