Golub Capital BDC, Inc. (GBDC) | Investment Case

1. Company Snapshot

1.a. Company Description

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.

Show Full description

1.b. Last Insights on GBDC

Golub Capital BDC's recent performance has been impacted by thin dividend coverage and a downward trending NAV per share. The company's high 12% dividend yield is at risk if net investment income declines further, particularly with more rate cuts. Despite a strong portfolio with first-lien debt and improving non-accruals, rising PIK income and higher leverage raise caution. Recent liability restructuring and portfolio growth have stabilized NII, but multiple Fed rate cuts could pressure the dividend in 2026.

1.c. Company Highlights

Last Price	14.27
Change Percentage	0.35%
Open	14.22
Previous Close	14.22
Market Cap ( Millions)	3801
Volume	1341637
Year High	16.01
Year Low	12.68
M A 50	13.87
M A 200	14.54

FCF Yield	-2.99%
Dividend Yield	10.93%
ROE	9.39%
Debt / Equity	123.06%
Net Debt / EBIDTA	1068.68%
Price To Book	0.95
Price Earnings Ratio	10.09
Price To FCF	-33.46
Price To sales	5.43
EV / EBITDA	19.15

2. GBDC's Solid Quarter Amidst Muted M&A Environment

GBDC reported another solid quarter, with adjusted NII per share of $0.39, corresponding to an adjusted NII return on equity of 10.4%. Adjusted net income per share was $0.34, an adjusted return on equity of 9.1%. The since-IPO internal rate of return for GBDC shareholders is 9.6% over 15 years. David Golub, CEO, described the quarter as "good [and] boring," highlighting the company's consistent performance.

Publication Date: Aug -07

                                    📋 Highlights
                                    Adjusted NII Return on Equity::
                                                10.4% ROE for adjusted NII per share of $0.39, reflecting strong operational efficiency.
Portfolio Growth and Credit Quality::
                                                Investment portfolio grew 4% to $9 billion at fair value, with nonaccruals at 0.6% of total portfolio.
NAV Impact from Repurchases::
                                                $0.01 per share NAV accretion from stock repurchases, offset by $0.05 per share from net realized/unrealized losses.
Debt Funding Structure::
                                                42% of debt in unsecured notes with no near-term maturities, and lowest pricing tier at 1.525% over 1-month SOFR.

                                

Portfolio Performance

The investment portfolio grew modestly quarter-over-quarter, increasing 4% to just under $9 billion at fair value. Investments on nonaccrual status remained very low at 60 basis points of the total investment portfolio at fair value. Matt Benton, CFO, attributed the solid performance to "solid credit performance, historically high base rates, and attractive spreads."

Valuation

GBDC's net asset value per share decreased to $15. The company's valuation metrics suggest that it is reasonably priced, with a P/E Ratio of 10.16, P/B Ratio of 0.98, and Dividend Yield of 11.88%. The ROE of 9.63% is also in line with industry peers.

Outlook

David Golub expects the credit cycle to become even more protracted, with defaults in the broadly syndicated market likely to continue at elevated levels for a considerable period. However, the company does not anticipate deleveraging, and its average leverage over the quarter was about 1.2, which is within its target range of 1.25. Chris Ericson, CIO, highlighted the company's debt funding structure, which remains highly diversified and flexible.

Spreads and Leverage

Regarding spreads in the floating rate markets, they are quite tight, not just with BDCs but also with syndicated loan spreads. David Golub noted that BDC spreads have lagged behind the movements in the syndicated loan market, and the company has seen significant spread compression in the broadly syndicated market since 2023. The company's average leverage is expected to remain within its target range, with no plans for further leveraging or deleveraging.

3. NewsRoom

Comparing WhiteHorse Finance (NASDAQ:WHF) and Golub Capital BDC (NASDAQ:GBDC)

Dec -03

Source: defenseworld.net

68 Graham Value All-Star (GVAS) November Dividend Dogs Show 27 'Safer' And 17 Ideal Buys

Dec -02

Source: seekingalpha.com

Golub Capital's Dividends Are At Risk

Nov -27

Source: seekingalpha.com

A Rare Buying Opportunity: Blue-Chip 11-12% Yields Too Cheap To Ignore

Nov -24

Source: seekingalpha.com

Foundations Investment Advisors LLC Reduces Position in Golub Capital BDC, Inc. $GBDC

Nov -21

Source: defenseworld.net

Golub Capital BDC (GBDC) Q4 2025 Earnings Call Transcript

Nov -19

Source: seekingalpha.com

Golub Capital BDC (GBDC) Meets Q4 Earnings Estimates

Nov -18

Source: zacks.com

Golub Capital BDC, Inc. Announces Fiscal Year 2025 Fourth Quarter Financial Results

Nov -18

Source: businesswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Investment and Related Activities

Expected Growth: 10.2%

Golub Capital BDC's investment in debt and equity securities of middle-market companies drives growth, fueled by increasing demand for alternative lending and private equity investments, as well as the company's expertise in originating and investing in these securities.

7. Detailed Products

Middle Market Lending

Golub Capital BDC, Inc. provides financing solutions to middle market companies, offering senior secured loans, one-stop loans, and second lien loans to support acquisitions, recapitalizations, and growth initiatives.

SLF FlexLoan

Golub Capital BDC's SLF FlexLoan is a flexible financing solution that provides borrowers with a single loan that combines the benefits of a first lien loan and a second lien loan.

Late Stage Lending

Golub Capital BDC provides late stage lending solutions to venture-backed companies, offering debt financing to support growth initiatives and bridge the gap to an initial public offering (IPO) or merger and acquisition (M&A) event.

Software and Technology Lending

Golub Capital BDC provides financing solutions to software and technology companies, offering debt financing to support growth initiatives, product development, and strategic acquisitions.

Healthcare Lending

Golub Capital BDC provides financing solutions to healthcare companies, offering debt financing to support growth initiatives, acquisitions, and recapitalizations.

8. Golub Capital BDC, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Golub Capital BDC, Inc. operates in a niche market, providing financing solutions to middle-market companies. While there are some substitutes available, such as traditional banks and other alternative lenders, the company's specialized expertise and flexible financing options mitigate the threat of substitutes.

Bargaining Power Of Customers

Golub Capital BDC, Inc.'s customers are typically middle-market companies that require specialized financing solutions. These customers often have limited bargaining power due to their reliance on the company's expertise and financing options.

Bargaining Power Of Suppliers

Golub Capital BDC, Inc. has a diversified portfolio of investments, which reduces its reliance on any single supplier. Additionally, the company's strong reputation and financial position give it bargaining power in negotiating with suppliers.

Threat Of New Entrants

The business development company (BDC) industry has high barriers to entry, including regulatory hurdles and the need for specialized expertise. This limits the threat of new entrants and allows Golub Capital BDC, Inc. to maintain its competitive position.

Intensity Of Rivalry

The BDC industry is competitive, with several established players vying for market share. However, Golub Capital BDC, Inc.'s specialized expertise and strong reputation help it to differentiate itself and maintain a competitive position.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	58.68%
Debt Cost	4.66%
Equity Weight	41.32%
Equity Cost	6.80%
WACC	5.54%
Leverage	142.02%

11. Quality Control: Golub Capital BDC, Inc. passed 3 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Main Street Capital

A-Score: 7.5/10

Value: 4.8

Growth: 6.0

Quality: 7.6

Yield: 9.0

Momentum: 8.0

Volatility: 9.3

1-Year Total Return ->

Ares Capital

A-Score: 7.3/10

Value: 6.7

Growth: 5.1

Quality: 8.0

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

1-Year Total Return ->

Golub Capital BDC

A-Score: 7.1/10

Value: 6.7

Growth: 5.8

Quality: 7.9

Yield: 10.0

Momentum: 2.5

Volatility: 10.0

1-Year Total Return ->

Hercules Capital

A-Score: 6.7/10

Value: 6.0

Growth: 3.6

Quality: 6.8

Yield: 10.0

Momentum: 4.0

Volatility: 9.7

1-Year Total Return ->

Victory Capital Holdings

A-Score: 6.4/10

Value: 4.7

Growth: 6.7

Quality: 8.4

Yield: 6.0

Momentum: 6.0

Volatility: 6.7

1-Year Total Return ->

Corebridge Financial

A-Score: 5.6/10

Value: 6.0

Growth: 3.3

Quality: 3.2

Yield: 8.0

Momentum: 6.0

Volatility: 7.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

26.56%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.54%

Golub Capital BDC, Inc. - US38173M1027

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on GBDC

1.c. Company Highlights

Higher Yield

Less Volatile

Strong Momentum

Earnings Beats

Revenues Miss

Stable Momentum

Average Quality

Earnings Miss

Lower Growth

Revenues Beats

Better Quality

Weak Momentum

Average Growth

2. GBDC's Solid Quarter Amidst Muted M&A Environment

Portfolio Performance

Valuation

Outlook

Spreads and Leverage

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (10.20%)

6. Segments

Investment and Related Activities

Expected Growth: 10.2%

7. Detailed Products

Middle Market Lending

SLF FlexLoan

Late Stage Lending

Software and Technology Lending

Healthcare Lending

8. Golub Capital BDC, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Golub Capital BDC, Inc. passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

14.27$

Current Price

14.27$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA