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

Profitability

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

Net Margins Return on Equity Return on Assets
DS Smith N/A N/A N/A
TCG BDC 24.05% 10.19% 5.23%

Analyst Recommendations

This is a breakdown of current recommendations for DS Smith and TCG BDC, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
DS Smith 0 0 0 0 N/A
TCG BDC 0 1 2 0 2.67

TCG BDC has a consensus price target of $16.83, suggesting a potential upside of 10.09%. Given TCG BDC’s higher probable upside, analysts plainly believe TCG BDC is more favorable than DS Smith.

Institutional & Insider Ownership

26.8% of TCG BDC shares are held by institutional investors. 0.1% of TCG BDC shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Dividends

TCG BDC pays an annual dividend of $1.48 per share and has a dividend yield of 9.7%. DS Smith does not pay a dividend. TCG BDC pays out 85.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Earnings & Valuation

This table compares DS Smith and TCG BDC’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
DS Smith $6.19 billion 0.78 N/A N/A N/A
TCG BDC $207.53 million 4.47 $39.12 million $1.73 8.84

TCG BDC has lower revenue, but higher earnings than DS Smith.

Volatility & Risk

DS Smith has a beta of 0.55, meaning that its stock price is 45% less volatile than the S&P 500. Comparatively, TCG BDC has a beta of 0.92, meaning that its stock price is 8% less volatile than the S&P 500.

Summary

TCG BDC beats DS Smith on 10 of the 12 factors compared between the two stocks.

About DS Smith

DS Smith Plc designs and manufactures corrugated packaging and plastic packaging for consumer goods. It provides transit and transport, consumer, retail and shelf ready, online and e-retail, industrial, hazardous, multi-material, inserts and cushioning, and electrostatic discharge packaging products, as well as wrap arounds, trays, and bag-in-boxes; displays and promotional packaging products; corrugated pallets; Sheetfeeding products; packaging machine systems; and Sizzlepak, a stuffing material made of paper, folded in a zigzag shape, and cut into narrow strips, as well as provides packaging consultancy services. The company serves the food and drinks, consumer goods, industrial, e-commerce, e-retail, and converters markets. It also provides various recycling and waste management services, including paper, cardboard, mixed dry, and plastics recycling services; confidential security shredding services; organics and food products; general waste recycling and shredding services; zero waste solutions; and added value services to medium and large corporates, and small businesses in the retail, manufacturing, print and publishing, public, and automotive sectors. In addition, the company offers recycled corrugated case materials and specialty papers; offers related technical and supply chain services; and manufactures and sells flexible packaging and dispensing solutions, rigid packaging solutions, and foam and injection molded products for use in the beverage, automotive, pharmaceutical, fresh produce, construction, and retail industries. It has operations in the United Kingdom, Western Europe, Northern Europe, Central Europe, Italy, North America, Germany, and Switzerland. The company was formerly known as David S. Smith (Holdings) PLC and changed its name to DS Smith Plc in 2001. DS Smith Plc was founded in 1940 and is headquartered in London, the United Kingdom.

About TCG BDC

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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