Gladstone Capital (GLAD) and Invesco Van Kampen Munpl Oprtnty Tr (VMO) Critical Analysis

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Gladstone Capital (NASDAQ:GLAD) and Invesco Van Kampen Munpl Oprtnty Tr (NYSE:VMO) are both small-cap finance companies, but which is the better business? We will compare the two businesses based on the strength of their analyst recommendations, risk, earnings, dividends, institutional ownership, profitability and valuation.

Earnings and Valuation

This table compares Gladstone Capital and Invesco Van Kampen Munpl Oprtnty Tr’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gladstone Capital $45.58 million 6.00 $18.64 million $0.85 10.96
Invesco Van Kampen Munpl Oprtnty Tr N/A N/A N/A N/A N/A

Gladstone Capital has higher revenue and earnings than Invesco Van Kampen Munpl Oprtnty Tr.

Profitability

This table compares Gladstone Capital and Invesco Van Kampen Munpl Oprtnty Tr’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gladstone Capital 16.24% 10.12% 5.79%
Invesco Van Kampen Munpl Oprtnty Tr N/A N/A N/A

Volatility and Risk

Gladstone Capital has a beta of 1.28, indicating that its stock price is 28% more volatile than the S&P 500. Comparatively, Invesco Van Kampen Munpl Oprtnty Tr has a beta of 0.15, indicating that its stock price is 85% less volatile than the S&P 500.

Institutional & Insider Ownership

11.9% of Gladstone Capital shares are held by institutional investors. Comparatively, 14.5% of Invesco Van Kampen Munpl Oprtnty Tr shares are held by institutional investors. 5.9% of Gladstone Capital shares are held by insiders. Comparatively, 1.0% of Invesco Van Kampen Munpl Oprtnty Tr 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

Gladstone Capital pays an annual dividend of $0.84 per share and has a dividend yield of 9.0%. Invesco Van Kampen Munpl Oprtnty Tr pays an annual dividend of $0.65 per share and has a dividend yield of 5.4%. Gladstone Capital pays out 98.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a breakdown of current recommendations and price targets for Gladstone Capital and Invesco Van Kampen Munpl Oprtnty Tr, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gladstone Capital 1 1 0 0 1.50
Invesco Van Kampen Munpl Oprtnty Tr 0 0 0 0 N/A

Gladstone Capital currently has a consensus price target of $8.50, suggesting a potential downside of 8.80%. Given Gladstone Capital’s higher possible upside, research analysts plainly believe Gladstone Capital is more favorable than Invesco Van Kampen Munpl Oprtnty Tr.

Summary

Gladstone Capital beats Invesco Van Kampen Munpl Oprtnty Tr on 8 of the 10 factors compared between the two stocks.

About Gladstone Capital

Gladstone Capital Corporation is a private equity and a venture capital fund specializing in lower middle market, growth capital, add on acquisitions, debt investments in senior loans, second lien loans, senior subordinated loans, junior subordinated loans, and mezzanine loans and equity investments in the form of common stock, preferred stock, limited liability company interests, or warrants. The fund also makes private equity investments in acquisitions, buyouts and recapitalizations, and refinancing existing debts. It targets small and medium-sized companies in United States. It invests in companies engaged in the business services, light and specialty manufacturing, niche industrial products and services, specialty consumer products and services, energy services, transportation and logistics, healthcare and education services, specialty chemicals, media and communications and aerospace and defense. The fund seeks to invest between $7 million and $30 million in companies that have between $20 million and $150 million in sales and EBITDA between $3 million and $25 million. It prefers to acquire minority stakes. It seeks to exit its investments through strategic acquisitions by other industry participants or financial buyers, initial public offerings of common stock, or other capital market transactions.

About Invesco Van Kampen Munpl Oprtnty Tr

Invesco Municipal Opportunity Trust is a closed ended fixed income mutual fund launched by Invesco Ltd. The fund is co-managed by Invesco Advisers, Inc., INVESCO Asset Management (Japan) Limited, INVESCO Asset Management Deutschland GmbH, INVESCO Asset Management Limited, Invesco Canada Ltd., Invesco Hong Kong Limited, and INVESCO Senior Secured Management, Inc. It invests in the fixed income markets of the United States. The fund primarily invests in investment grade municipal securities which include municipal bonds, municipal notes, municipal commercial paper, and lease obligations. It employs fundamental analysis with bottom-up security selection approach to create its portfolio. The fund was formerly known as Invesco Van Kampen Municipal Opportunity Trust. Invesco Municipal Opportunity Trust was formed on April 24, 1992 and is domiciled in the United States.

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