Goldman Sachs BDC Earnings Preview: Q4 2024

Report Date: February 27, 2025, After Market Close

Key Metrics to Watch

Earnings Expectations

Goldman Sachs BDC is anticipated to report its fourth-quarter earnings per share (EPS) at $0.495, marking a -11.61% decline compared to $0.56 reported a year ago. The consensus among analysts, based on four estimates, ranges between $0.46 and $0.53. This downward revision reflects growing concerns over the company’s ability to sustain its earnings growth amidst challenging market conditions and increased operational costs.

Revenue Projections

Revenue for Q4 2024 is projected to be $105.32 million, representing a -8.71% year-over-year decline. This is a notable decrease from the previous quarter’s revenue of $115.37 million. The contraction in revenue can be attributed to reduced lending activities and lower interest income, potentially impacted by tighter credit conditions and decreased demand for financing solutions.

---

Recent Performance and Trends

Earnings History

Goldman Sachs BDC has exhibited mixed performance in the recent quarters, demonstrating a degree of volatility in its earnings:

• Q3 2024: The company exceeded earnings expectations by 6.42%, reporting an EPS of $0.58 compared to the estimated $0.545. This beat suggests resilience and effective cost management during the quarter.
• Q2 2024: A significant earnings beat of 12.02% was recorded, with an EPS of $0.59 against an estimate of $0.527. This strong performance was driven by robust investment returns and strategic portfolio adjustments.
• Q1 2024: Earnings slightly surpassed expectations by 1.38%, with an EPS of $0.55 versus the estimated $0.543. While modest, this beat highlighted the company’s consistent ability to meet market forecasts.

These fluctuations indicate that while Goldman Sachs BDC has the capacity to outperform expectations, it remains susceptible to external economic pressures and internal operational challenges.

Financial Health Indicators

Assessing the company’s financial health reveals several critical metrics:

• Current Ratio: 0.196
  A current ratio below 1 suggests potential liquidity concerns, indicating that Goldman Sachs BDC may struggle to cover its short-term liabilities with its current assets.

• Debt-to-Equity: 118.57%
  A high debt-to-equity ratio signals a significant reliance on debt financing, which could increase financial risk, especially in a rising interest rate environment.

• Return on Equity (ROE): 4.76%
  This relatively low ROE reflects the company’s ability to generate profits from its shareholders’ equity, highlighting potential inefficiencies in capital utilization.

• Total Cash: $52.96 million
  A modest cash reserve provides some buffer against short-term financial obligations but may be insufficient in mitigating prolonged economic downturns.

• Total Debt: $1.88 billion
  Substantial debt levels underscore the importance of effective debt management strategies to maintain financial stability and investor confidence.

---

Analyst Sentiment and Revisions

EPS Trend Changes

The EPS estimates for Goldman Sachs BDC have seen minor adjustments over recent periods:

• Current estimate: $0.495
• 7 days ago: $0.4925
• 30 days ago: $0.495
• 90 days ago: $0.50

These slight variations indicate that analysts are closely monitoring the company’s performance but have largely maintained their outlook, suggesting a consensus on the expected earnings trajectory.

Recent Revisions

Analysts have made the following revisions to their earnings estimates:

• Last 7 days: 1 upward revision
• Last 30 days: 2 upward, 1 downward revision

The presence of both upward and downward revisions reflects a balanced perspective among analysts, with some recognizing recent positive developments while others remain cautious about potential risks.

---

Looking Forward

Full Year 2025 Outlook

For the full year of 2025, Goldman Sachs BDC’s outlook presents several key projections:

• EPS Projection: $1.75, signifying an expected -20.25% decline. This substantial decrease underscores anticipated challenges in maintaining earnings growth amidst a dynamic economic landscape.

• Revenue Estimate: $418 million, reflecting a -4.11% projected decline. The decline in revenue suggests potential headwinds in the business environment, such as reduced client borrowing and increased competition.

These projections highlight the need for the company to implement strategic initiatives to counteract the negative trends and stabilize its financial performance moving forward.

---

Investment Considerations

Strengths

Goldman Sachs BDC possesses several strengths that may appeal to investors:

• Consistent History of Earnings Beats: The company’s ability to regularly surpass earnings estimates demonstrates effective management and operational competence.

• Strong Gross Margins: High gross margins indicate efficient control over production costs and the ability to retain a significant portion of revenue.

• Stable Operating Margins at 89.64%: Maintaining stable operating margins suggests disciplined cost management and sustained profitability from core operations.

These strengths contribute to the company’s resilience and potential for long-term value creation despite short-term challenges.

Challenges

Conversely, Goldman Sachs BDC faces notable challenges that could impact its investment appeal:

• Declining Revenue Growth (-8.71% YoY): A reduction in revenue growth signals weakening demand and potential market share loss, which could hinder future expansion efforts.

• High Debt-to-Equity Ratio: The elevated debt level increases financial leverage risks, especially in a volatile interest rate environment, potentially affecting the company’s ability to secure additional financing.

• Negative Earnings Growth Trend: A trend of declining earnings growth raises concerns about the company’s ability to sustain profitability and deliver returns to shareholders.

Addressing these challenges is crucial for maintaining investor confidence and ensuring sustained financial health.

Market Position

• Market Cap: $1.55 billion
  Positioned as a mid-cap company, Goldman Sachs BDC occupies a significant space in the market, offering potential growth opportunities alongside established competitors.

• Current Price: $13.20
  The current stock price reflects market perceptions of the company’s value, influenced by both its financial performance and broader economic factors.

• Mean Target Price: $12.67
  The mean target price suggests a slight undervaluation relative to the current price, indicating potential for price adjustment based on future performance.

• Analyst Target Range: $12.00 - $13.00
  The target range encompasses values below and near the current price, highlighting differing analyst opinions on the company’s short-term prospects.

Understanding the company’s market position helps investors gauge its competitive stance and potential for stock performance.

---

Bottom Line

Investors should closely monitor Goldman Sachs BDC’s ability to maintain its dividend coverage and manage its debt levels amid challenging market conditions.

While the company’s recent earnings beats are encouraging and demonstrate underlying operational strengths, the projected decline in both revenue and earnings suggests that a cautious positioning may be warranted. Balancing the company’s strengths with its financial challenges is essential for making informed investment decisions.

Note: All financial figures are in USD unless otherwise stated.

Additional Resources

View Goldman Sachs BDC Inc Stock Chart

You can visit Goldman Sachs BDC Inc website here

Disclaimer: This analysis is for informational purposes only and does not constitute investment advice. All trading and investment decisions should be made based on your own research, experience, and risk tolerance.