Solar Capital (NASDAQ: SLRC) and Gladstone Capital (NASDAQ:GLAD) are both small-cap financials companies, but which is the better business? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, dividends, earnings, profitability, risk and valuation.
This table compares Solar Capital and Gladstone Capital’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Solar Capital pays an annual dividend of $1.60 per share and has a dividend yield of 7.7%. Gladstone Capital pays an annual dividend of $0.84 per share and has a dividend yield of 9.4%. Solar Capital pays out 95.8% 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 Capital pays out 93.3% 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 Capital is clearly the better dividend stock, given its higher yield and lower payout ratio.
This is a summary of recent ratings for Solar Capital and Gladstone Capital, as reported by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Solar Capital currently has a consensus price target of $23.67, indicating a potential upside of 14.61%. Gladstone Capital has a consensus price target of $9.16, indicating a potential upside of 3.07%. Given Solar Capital’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Solar Capital is more favorable than Gladstone Capital.
Risk & Volatility
Solar Capital has a beta of 0.54, suggesting that its stock price is 46% less volatile than the S&P 500. Comparatively, Gladstone Capital has a beta of 1.11, suggesting that its stock price is 11% more volatile than the S&P 500.
Insider & Institutional Ownership
62.2% of Solar Capital shares are owned by institutional investors. Comparatively, 13.7% of Gladstone Capital shares are owned by institutional investors. 5.9% of Solar Capital shares are owned by insiders. Comparatively, 5.9% of Gladstone Capital shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.
Earnings & Valuation
This table compares Solar Capital and Gladstone Capital’s gross revenue, earnings per share and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Solar Capital||$143.34 million||6.09||$70.43 million||$1.67||12.37|
|Gladstone Capital||$39.23 million||6.03||$17.18 million||$0.90||9.88|
Solar Capital has higher revenue and earnings than Gladstone Capital. Gladstone Capital is trading at a lower price-to-earnings ratio than Solar Capital, indicating that it is currently the more affordable of the two stocks.
Solar Capital beats Gladstone Capital on 10 of the 16 factors compared between the two stocks.
About Solar Capital
Solar Capital Ltd. is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to generate both current income and capital appreciation through debt and equity investments. It invests in privately held the United States middle market companies. It invests in leveraged middle market companies in the form of senior secured loans, unitranche loans, mezzanine loans and equity securities. It may also invest in public companies that are thinly traded. Its business is focused primarily on the direct origination of investments through portfolio companies or their financial sponsors. Its investments generally range between $5 million and $100 million each. In addition, the Company may invest a portion of its portfolio in other types of investments, which it refers to as opportunistic investments. The Company’s investment activities are managed by Solar Capital Partners, LLC (Solar Capital Partners or the Investment Advisor).
About Gladstone Capital
Gladstone Capital Corporation is a closed-end, non-diversified management investment company, operating as a business development company (BDC). The objectives of the Company are to achieve and grow current income by investing in debt securities of established businesses that it believes will provide stable earnings and cash flow to pay expenses, make principal and interest payments on its outstanding indebtedness and make distributions to stockholders that grow over time, and to provide its stockholders with long-term capital appreciation in the value of its assets by investing in equity securities of established businesses that it believes can grow over time to permit it to sell its equity investments for capital gains. The Company is focused on investing in lower middle-market companies in the United States. It has investments in south, Midwest, west and northeast of the United States. Its portfolio allocation includes debt investments and equity investments.
Receive News & Ratings for Solar Capital Daily - Enter your email address below to receive a concise daily summary of the latest news and analysts' ratings for Solar Capital and related companies with MarketBeat.com's FREE daily email newsletter.