Head to Head Analysis: Bank Of New York Mellon (BK) versus Goldman Sachs BDC (NYSE:GSBD)

Bank Of New York Mellon (NYSE: BK) and Goldman Sachs BDC (NYSE:GSBD) are both financials companies, but which is the superior stock? We will contrast the two businesses based on the strength of their risk, institutional ownership, dividends, profitability, analyst recommendations, earnings and valuation.

Institutional & Insider Ownership

82.8% of Bank Of New York Mellon shares are held by institutional investors. Comparatively, 36.5% of Goldman Sachs BDC shares are held by institutional investors. 3.6% of Bank Of New York Mellon shares are held by company insiders. Comparatively, 0.3% of Goldman Sachs BDC shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

Bank Of New York Mellon pays an annual dividend of $0.96 per share and has a dividend yield of 1.8%. Goldman Sachs BDC pays an annual dividend of $1.80 per share and has a dividend yield of 8.3%. Bank Of New York Mellon pays out 28.2% of its earnings in the form of 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. Goldman Sachs BDC has raised its dividend for 4 consecutive years. Goldman Sachs BDC is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Valuation and Earnings

This table compares Bank Of New York Mellon and Goldman Sachs BDC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Bank Of New York Mellon $15.67 billion 3.53 $3.55 billion $3.40 15.89
Goldman Sachs BDC $125.11 million 6.94 $40.65 million $1.12 19.31

Bank Of New York Mellon has higher revenue and earnings than Goldman Sachs BDC. Bank Of New York Mellon 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.

Analyst Recommendations

This is a breakdown of current ratings for Bank Of New York Mellon and Goldman Sachs BDC, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Bank Of New York Mellon 2 9 4 1 2.25
Goldman Sachs BDC 0 3 3 0 2.50

Bank Of New York Mellon presently has a consensus target price of $54.88, indicating a potential upside of 1.58%. Goldman Sachs BDC has a consensus target price of $22.60, indicating a potential upside of 4.48%. Given Goldman Sachs BDC’s stronger consensus rating and higher possible upside, analysts plainly believe Goldman Sachs BDC is more favorable than Bank Of New York Mellon.

Profitability

This table compares Bank Of New York Mellon and Goldman Sachs BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Bank Of New York Mellon 23.14% 10.51% 1.11%
Goldman Sachs BDC 32.19% 11.34% 6.65%

Volatility & Risk

Bank Of New York Mellon has a beta of 1.22, suggesting that its stock price is 22% more volatile than the S&P 500. Comparatively, Goldman Sachs BDC has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.

Summary

Bank Of New York Mellon beats Goldman Sachs BDC on 10 of the 18 factors compared between the two stocks.

Bank Of New York Mellon Company Profile

The Bank of New York Mellon Corporation is an investments company. The Company operates businesses through two segments: Investment Management and Investment Services. The Company also has an Other segment, which includes the leasing portfolio, corporate treasury activities (including its investment securities portfolio), derivatives and other trading, corporate and bank-owned life insurance and renewable energy investments, and business exits. As of December 31, 2016, the Company had $29.9 trillion in assets under custody and/or administration and $1.6 trillion in assets under management. The Company’s Investment Management boutiques offer a range of actively managed equity, fixed income, alternative and liability-driven investments, along with passive products and cash management. The Company offers asset servicing, clearing services, issuer services and treasury services to its clients.

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.

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