Critical Review: Blue Owl Capital (NYSE:OWL) & Barings Bdc (NYSE:BBDC)

Barings Bdc (NYSE:BBDC) and Blue Owl Capital (NYSE:OWL) are both finance companies, but which is the better business? We will compare the two companies based on the strength of their earnings, institutional ownership, risk, dividends, valuation, profitability and analyst recommendations.

Profitability

This table compares Barings Bdc and Blue Owl Capital’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Barings Bdc	32.73%	10.07%	4.38%
Blue Owl Capital	2.71%	23.14%	11.01%

Analyst Recommendations

This is a breakdown of recent ratings and target prices for Barings Bdc and Blue Owl Capital, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Barings Bdc	0	4	1	0	2.20
Blue Owl Capital	0	9	7	1	2.53

Barings Bdc presently has a consensus target price of $9.75, indicating a potential upside of 13.31%. Blue Owl Capital has a consensus target price of $13.36, indicating a potential upside of 49.01%. Given Blue Owl Capital’s stronger consensus rating and higher probable upside, analysts plainly believe Blue Owl Capital is more favorable than Barings Bdc.

Dividends

Barings Bdc pays an annual dividend of $1.04 per share and has a dividend yield of 12.1%. Blue Owl Capital pays an annual dividend of $0.92 per share and has a dividend yield of 10.3%. Barings Bdc pays out 125.3% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Blue Owl Capital pays out 766.7% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Barings Bdc has raised its dividend for 3 consecutive years and Blue Owl Capital has raised its dividend for 4 consecutive years. Barings Bdc is clearly the better dividend stock, given its higher yield and lower payout ratio.

Valuation and Earnings

This table compares Barings Bdc and Blue Owl Capital”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Barings Bdc	$99.76 million	9.03	$101.92 million	$0.83	10.37
Blue Owl Capital	$2.99 billion	4.67	$78.83 million	$0.12	74.71

Barings Bdc has higher earnings, but lower revenue than Blue Owl Capital. Barings Bdc is trading at a lower price-to-earnings ratio than Blue Owl Capital, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

44.1% of Barings Bdc shares are held by institutional investors. Comparatively, 35.8% of Blue Owl Capital shares are held by institutional investors. 0.6% of Barings Bdc shares are held by insiders. Comparatively, 25.7% of Blue Owl Capital shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Volatility & Risk

Barings Bdc has a beta of 0.64, meaning that its stock price is 36% less volatile than the S&P 500. Comparatively, Blue Owl Capital has a beta of 1.35, meaning that its stock price is 35% more volatile than the S&P 500.

Summary

Blue Owl Capital beats Barings Bdc on 11 of the 18 factors compared between the two stocks.

About Barings Bdc

Barings BDC, Inc. is a publicly traded, externally managed investment company that has elected to be treated as a business development company under the Investment Company Act of 1940. It seeks to invest primarily in senior secured loans, first lien debt, unitranche, second lien debt, subordinated debt, equity co-investments and senior secured private debt investments in private middle-market companies that operate across a wide range of industries. It specializes in mezzanine, leveraged buyouts, management buyouts, ESOPs, change of control transactions, acquisition financings, growth financing, and recapitalizations in lower middle market, mature, and later stage companies. It invests in manufacturing and distribution; business services and technology; transportation and logistics; consumer product and services. It invests in United States. It invests in companies with EBITDA of $10 million to $75 million, typically in private equity sponsor backed.

About Blue Owl Capital

Blue Owl Capital Inc. operates as an asset manager in the United States. The company offers permanent capital base solutions that enables it to offer holistic framework of capital solutions to middle market companies, large alternative asset managers, and corporate real estate owners and tenants. It also provides direct lending products that offer private credit products comprising diversified, technology, first lien, and opportunistic lending to middle-market companies; liquid credit; GP strategic capital products, which offers capital solutions, including GP minority stakes, GP debt financing, and professional sports minority stakes; and real estate products that focuses on acquiring triple net lease real estate by investment grade or creditworthy tenants. It offers its solutions through permanent capital vehicles, as well as long-dated private funds. Blue Owl Capital Inc. is headquartered in New York, New York.