Contrasting Gladstone Investment (NASDAQ:GAIN) & InvestcorpCreditManagementBDCInc . (NASDAQ:ICMB)

Gladstone Investment (NASDAQ:GAIN) and InvestcorpCreditManagementBDCInc . (NASDAQ:ICMB) are both small-cap finance companies, but which is the superior business? We will contrast the two businesses based on the strength of their profitability, analyst recommendations, institutional ownership, dividends, risk, earnings and valuation.

Risk & Volatility

Gladstone Investment has a beta of 0.81, suggesting that its share price is 19% less volatile than the S&P 500. Comparatively, InvestcorpCreditManagementBDCInc . has a beta of 1.29, suggesting that its share price is 29% more volatile than the S&P 500.

Dividends

Gladstone Investment pays an annual dividend of $0.82 per share and has a dividend yield of 6.7%. InvestcorpCreditManagementBDCInc . pays an annual dividend of $1.00 per share and has a dividend yield of 15.4%. Gladstone Investment pays out 106.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. InvestcorpCreditManagementBDCInc . pays out 101.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gladstone Investment has increased its dividend for 6 consecutive years. InvestcorpCreditManagementBDCInc . is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Gladstone Investment and InvestcorpCreditManagementBDCInc .’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gladstone Investment 89.98% 6.84% 4.32%
InvestcorpCreditManagementBDCInc . -42.28% 8.70% 4.15%

Valuation and Earnings

This table compares Gladstone Investment and InvestcorpCreditManagementBDCInc .’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gladstone Investment $59.66 million 6.74 $81.59 million $0.77 15.91
InvestcorpCreditManagementBDCInc . $34.40 million 2.57 -$14.54 million $0.99 6.55

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

Institutional & Insider Ownership

12.6% of Gladstone Investment shares are owned by institutional investors. Comparatively, 44.5% of InvestcorpCreditManagementBDCInc . shares are owned by institutional investors. 2.6% of Gladstone Investment shares are owned by insiders. Comparatively, 1.9% of InvestcorpCreditManagementBDCInc . shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Analyst Ratings

This is a summary of recent recommendations and price targets for Gladstone Investment and InvestcorpCreditManagementBDCInc ., as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gladstone Investment 0 1 0 0 2.00
InvestcorpCreditManagementBDCInc . 0 0 1 0 3.00

InvestcorpCreditManagementBDCInc . has a consensus target price of $9.00, suggesting a potential upside of 38.89%. Given InvestcorpCreditManagementBDCInc .’s stronger consensus rating and higher possible upside, analysts clearly believe InvestcorpCreditManagementBDCInc . is more favorable than Gladstone Investment.

Summary

InvestcorpCreditManagementBDCInc . beats Gladstone Investment on 9 of the 17 factors compared between the two stocks.

Gladstone Investment Company Profile

Gladstone Investment Corporation is a private equity fund specializing in lower middle market, acquisitions, mature stage, buyouts; recapitalizations; refinancing existing debt; senior debt securities such as senior loans, senior term loans, lines of credit, and senior notes; senior subordinated debt securities such as senior subordinated loans and senior subordinated notes; junior subordinated debt securities such as subordinated notes and mezzanine loans; limited liability company interests, and warrants or options. The fund does not invest in start-ups. The fund seek to invest in manufacturing, consumer products and business services/ distribution sector. It seeks to invest in small and mid-sized companies based in the United States. The fund prefers to make debt investments between $5 million and $30 million and equity investments between $10 million and $40 million in companies. The fund seeks to invest in companies with sales between $20 million and $100 million. The fund invest in companies with EBITDA from $3 million to $20 million. It seeks minority equity ownership and prefers to hold a board seat in its portfolio companies. It also prefers to take majority stake in its portfolio companies. The fund typically holds its investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.

InvestcorpCreditManagementBDCInc . Company Profile

CM Finance Inc. is a business development company specializing in loan, mezzanine, middle market, growth capital, and recapitalization investments. The fund typically invests in United States and Europe. Within United States, the fund seeks to invest in Midatlantic, Midwest, Northeast, Southeast, and West Coast regions. The fund primarily invests in cable and satellites; consumer services; healthcare equipment and services; industrials; information technology; telecommunication services; and utilities sectors. The fund seeks to invest in companies with EBITDA more than $15 million. The fund is based in New York, New York.

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