Financial Contrast: SGS (SGSOY) and TCG BDC (CGBD)

SGS (OTCMKTS:SGSOY) and TCG BDC (NASDAQ:CGBD) are both business services companies, but which is the better business? We will compare the two companies based on the strength of their dividends, valuation, earnings, analyst recommendations, profitability, institutional ownership and risk.

Profitability

This table compares SGS and TCG BDC’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
SGS N/A N/A N/A
TCG BDC 45.15% 9.32% 5.21%

Analyst Recommendations

This is a breakdown of current recommendations and price targets for SGS and TCG BDC, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
SGS 0 1 0 0 2.00
TCG BDC 0 2 2 0 2.50

TCG BDC has a consensus price target of $17.67, suggesting a potential upside of 9.32%. Given TCG BDC’s stronger consensus rating and higher possible upside, analysts plainly believe TCG BDC is more favorable than SGS.

Volatility & Risk

SGS has a beta of 0.86, suggesting that its share price is 14% less volatile than the S&P 500. Comparatively, TCG BDC has a beta of -0.54, suggesting that its share price is 154% less volatile than the S&P 500.

Institutional & Insider Ownership

0.3% of SGS shares are owned by institutional investors. Comparatively, 19.9% of TCG BDC shares are owned by institutional investors. 0.1% of TCG BDC shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Valuation and Earnings

This table compares SGS and TCG BDC’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
SGS $6.45 billion 2.91 $631.12 million $0.93 26.47
TCG BDC $165.00 million 6.13 $84.20 million $1.74 9.29

SGS has higher revenue and earnings than TCG BDC. TCG BDC is trading at a lower price-to-earnings ratio than SGS, indicating that it is currently the more affordable of the two stocks.

Dividends

SGS pays an annual dividend of $0.46 per share and has a dividend yield of 1.9%. TCG BDC pays an annual dividend of $1.48 per share and has a dividend yield of 9.2%. SGS pays out 49.5% of its earnings in the form of a dividend. TCG BDC pays out 85.1% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

TCG BDC beats SGS on 11 of the 16 factors compared between the two stocks.

SGS Company Profile

SGS SA provides inspection, verification, testing, certification, and quality assurance services in Europe, Africa, the Middle East, the Americas, and the Asia Pacific. The company operates in nine segments: Agriculture, Food and Life; Minerals Services; Oil, Gas, & Chemicals Services; Consumer and Retail Services; Certification and Business Enhancement; Industrial Services; Environment, Health and Safety Services; Transportation Services; and Governments and Institutions Services. It offers certification services that enable clients to demonstrate compliance of their products, processes, systems, or services with national and international regulations and standards; and inspection services to reduce risk, control quality and quantity, and meet relevant regulatory requirements in various regions and markets. The company also provides outsourcing services; product testing services; workforce training services; verification services; consultancy services; and data analytics services. It serves agriculture and food, automotive, chemical, construction, consumer goods and retail, energy, industrial manufacturing, life sciences, mining, and oil and gas industries, as well as public and transportation sectors. SGS SA was founded in 1878 and is headquartered in Geneva, Switzerland.

TCG BDC Company Profile

TCG BDC, Inc. is a non-diversified closed-end investment company. The fund operates as a business development company. The company provides debt investments in the U.S. middle market companies. It also invests in first lien and second lien senior secured loans; middle market junior loans, such as corporate mezzanine loans, equity co-investments, syndicated first lien and second lien senior secured loans, high-yield bonds, structured finance obligations, and other opportunistic investments. The company was founded in 2012 and is headquartered in New York, New York.

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