Gladstone Investment (NASDAQ:GAIN – Get Free Report) and Chicago Atlantic BDC (NASDAQ:LIEN – Get Free Report) are both small-cap finance companies, but which is the superior business? We will contrast the two companies based on the strength of their valuation, earnings, profitability, analyst recommendations, risk, institutional ownership and dividends.
Earnings and Valuation
This table compares Gladstone Investment and Chicago Atlantic BDC”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Gladstone Investment | $93.66 million | 5.96 | $65.32 million | $2.50 | 5.63 |
| Chicago Atlantic BDC | $39.86 million | 5.97 | $9.62 million | $0.79 | 13.19 |
Analyst Recommendations
This is a breakdown of recent ratings and price targets for Gladstone Investment and Chicago Atlantic BDC, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Gladstone Investment | 0 | 4 | 1 | 0 | 2.20 |
| Chicago Atlantic BDC | 0 | 3 | 0 | 0 | 2.00 |
Dividends
Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 6.8%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 13.1%. Gladstone Investment pays out 38.4% of its earnings in the form of a dividend. Chicago Atlantic BDC pays out 172.2% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.
Profitability
This table compares Gladstone Investment and Chicago Atlantic BDC’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Gladstone Investment | 94.99% | 7.12% | 3.34% |
| Chicago Atlantic BDC | 33.72% | 5.80% | 5.46% |
Institutional and Insider Ownership
11.9% of Gladstone Investment shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 2.4% of Gladstone Investment shares are held by insiders. Comparatively, 16.9% of Chicago Atlantic 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.
Volatility and Risk
Gladstone Investment has a beta of 0.84, meaning that its share price is 16% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.26, meaning that its share price is 74% less volatile than the S&P 500.
Summary
Gladstone Investment beats Chicago Atlantic BDC on 10 of the 15 factors compared between the two stocks.
About Gladstone Investment
Gladstone Investment Corporation is business development company, specializes in lower middle market, mature stage, buyouts; 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 seeks to invest in manufacturing, consumer products and business/consumer services 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 revenue between $20 million and $100 million. The fund invests 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 the investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.
About Chicago Atlantic BDC
Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.
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