GBDC - Golub Capital: Outperformance In Q2 Made This BDC Too Expensive (Downgrade)
2024-05-07 15:06:28 ET
Summary
- Golub Capital has delivered superior growth, outperforming the S&P 500 in total return as well as many BDC peers.
- GBDC's Q2 earnings showed consistent growth, with NII increasing by 21%. The NAV has also consistently grown over the past year.
- GBDC's dividend yield is currently 9.2%, but the recent price run has made the stock less attractive as it now trades at a higher premium to NAV than average.
- Management cut their base management fee down to 1%, contributing to NII growth.
- Non-accruals slightly decreased over the last quarter, reinforcing GBDC's portfolio strength.
Overview
I previously assigned Golub Capital ( GBDC ) two separate buy ratings: the first one in November of 2023 and the most recent being in February of 2024. My last coverage leaned heavily on the idea more investors would flock to higher yielding assets such as BDCs to offset a higher interest rate environment. At the time, the Fed seemed to be dragging their feet on implementing interest rate cuts. Now it seems that rate cuts aren't expected this quarter and will likely continue to get pushed back as inflation remains high, and the labor market is strong....
Golub Capital: Outperformance In Q2 Made This BDC Too Expensive (Downgrade)