Comparing Golub Capital BDC (NASDAQ:GBDC) and Morningstar (NASDAQ:MORN)

Golub Capital BDC (NASDAQ:GBDC) and Morningstar (NASDAQ:MORN) are both mid-cap finance companies, but which is the superior investment? We will compare the two companies based on the strength of their analyst recommendations, earnings, institutional ownership, valuation, profitability, risk and dividends.

Institutional & Insider Ownership

42.4% of Golub Capital BDC shares are owned by institutional investors. Comparatively, 57.0% of Morningstar shares are owned by institutional investors. 1.4% of Golub Capital BDC shares are owned by insiders. Comparatively, 38.8% of Morningstar shares are owned by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Volatility & Risk

Golub Capital BDC has a beta of 0.41, indicating that its share price is 59% less volatile than the S&P 500. Comparatively, Morningstar has a beta of 1.02, indicating that its share price is 2% more volatile than the S&P 500.

Valuation and Earnings

This table compares Golub Capital BDC and Morningstar”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Golub Capital BDC	$870.78 million	3.74	$376.65 million	$0.65	19.29
Morningstar	$2.45 billion	2.82	$374.20 million	$10.56	17.38

Golub Capital BDC has higher earnings, but lower revenue than Morningstar. Morningstar 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.

Dividends

Golub Capital BDC pays an annual dividend of $1.32 per share and has a dividend yield of 10.5%. Morningstar pays an annual dividend of $2.00 per share and has a dividend yield of 1.1%. Golub Capital BDC pays out 203.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Morningstar pays out 18.9% of its earnings in the form of a dividend. Morningstar has raised its dividend for 16 consecutive years.

Analyst Recommendations

This is a breakdown of current ratings for Golub Capital BDC and Morningstar, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Golub Capital BDC	0	2	4	1	2.86
Morningstar	0	1	2	0	2.67

Golub Capital BDC currently has a consensus target price of $13.90, indicating a potential upside of 10.85%. Morningstar has a consensus target price of $227.33, indicating a potential upside of 23.85%. Given Morningstar’s higher possible upside, analysts plainly believe Morningstar is more favorable than Golub Capital BDC.

Profitability

This table compares Golub Capital BDC and Morningstar’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Golub Capital BDC	21.45%	9.91%	4.39%
Morningstar	16.43%	38.57%	12.22%

Summary

Morningstar beats Golub Capital BDC on 10 of the 18 factors compared between the two stocks.

About Golub Capital BDC

Golub Capital BDC, Inc. (GBDC) 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. It typically invests in diversified consumer services, automobiles, healthcare technology, insurance, health care equipment and supplies, hotels, restaurants and leisure, healthcare providers and services, IT services and specialty retails. It seeks to invest in the United States. It primarily invests in first lien traditional senior debt, first lien one stop, junior debt and equity, senior secured, one stop, unitranche, second lien, subordinated and mezzanine loans of middle-market companies, and warrants.

About Morningstar

Morningstar, Inc. provides independent investment insights in the United States, Asia. Australia, Continental Europe, the United Kingdom, and internationally. The company operates in five segments: Morningstar Data and Analytics; PitchBook; Morningstar Wealth; Morningstar Credit; and Morningstar Retirement. The company offers managing investments, including mutual funds, ETFs, separate accounts, collective investment trusts, model portfolios, equities, and fixed income securities; Morningstar Direct is an investment-analysis and reporting platform; Morningstar Advisor Workstation, a suite of tool to provide help and advice. The PitchBook segment provides data and research covering the private capital markets comprising venture capital, private equity, private credit and bank loans, and merger and acquisition activities; and pitchbook platform. It provides model portfolios and wealth platforms; Morningstar Managed Portfolios, an advisor service with model portfolios designed for fee-based independent financial advisors; and Morningstar.com that discovers, evaluates, and monitors stocks, ETFs, and mutual funds; build and monitor portfolios and markets. In addition, the company provides credit ratings, research, data, and credit analytics solutions; Morningstar DBRS which offers securitizations and other structured finance instruments, such as asset-backed securities, residential mortgage-backed securities, commercial mortgage-backed securities, and collateralized loan obligations. Further, it offers managed retirement accounts, fiduciary services, Morningstar Lifetime Allocation funds, and custom models; Morningstar Indexes offers market indexes used for performance benchmarks and as the basis for investment products and other portfolio strategies; and Morningstar Sustainalytics provides environmental, social and governance data, research, analysis, and insights. Morningstar, Inc. was incorporated in 1984 and is headquartered in Chicago, Illinois.