Critical Comparison: Goldman Sachs BDC (GSBD) & Noah Holdings (NOAH)

Goldman Sachs BDC (NYSE: GSBD) and Noah Holdings (NYSE:NOAH) are both finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, analyst recommendations, dividends, risk, valuation, earnings and institutional ownership.

Profitability

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

Net Margins Return on Equity Return on Assets
Goldman Sachs BDC 32.19% 11.53% 6.68%
Noah Holdings 29.39% 18.42% 11.94%

Dividends

Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.1%. Noah Holdings does not pay a dividend. Goldman Sachs BDC pays out 160.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current recommendations and price targets for Goldman Sachs BDC and Noah Holdings, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Goldman Sachs BDC 0 4 3 0 2.43
Noah Holdings 0 0 1 0 3.00

Goldman Sachs BDC currently has a consensus price target of $22.60, indicating a potential upside of 2.31%. Noah Holdings has a consensus price target of $29.00, indicating a potential downside of 26.71%. Given Goldman Sachs BDC’s higher probable upside, research analysts clearly believe Goldman Sachs BDC is more favorable than Noah Holdings.

Earnings and Valuation

This table compares Goldman Sachs BDC and Noah Holdings’ gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio NetIncome Earnings Per Share Price/Earnings Ratio
Goldman Sachs BDC $125.11 million 7.09 $40.65 million $1.12 19.72
Noah Holdings $362.03 million 6.18 $92.73 million $1.73 22.87

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

Volatility & Risk

Goldman Sachs BDC has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500. Comparatively, Noah Holdings has a beta of 2.6, meaning that its stock price is 160% more volatile than the S&P 500.

Institutional and Insider Ownership

36.8% of Goldman Sachs BDC shares are owned by institutional investors. Comparatively, 41.3% of Noah Holdings shares are owned by institutional investors. 0.3% of Goldman Sachs BDC shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Summary

Noah Holdings beats Goldman Sachs BDC on 10 of the 16 factors compared between the two stocks.

About Goldman Sachs BDC

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.

About Noah Holdings

Noah Holdings Limited is a wealth management service provider with a focus on global wealth investment and asset allocation services for high net worth individuals and enterprises in China. The Company operates through three segments: wealth management, asset management and Internet finance. It also provides Internet finance services to clients in China. It provides direct access to China’s high net worth population. With approximately 1,100 relationship managers in over 130 branch offices, its coverage network includes China’s regions where high net worth population is concentrated, including the Yangtze River Delta, the Pearl River Delta, the Bohai Rim and other regions. Its product offerings consist primarily of over-the-counter (OTC) wealth management and OTC asset management products, mutual fund products and asset management plans originated in China and designed to cater to the needs of China’s high net worth population.

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