Carlyle Secured Lending (NASDAQ:CGBD – Get Free Report) and Gladstone Investment (NASDAQ:GAIN – Get Free Report) are both small-cap finance companies, but which is the superior investment? We will contrast the two companies based on the strength of their profitability, dividends, institutional ownership, valuation, earnings, risk and analyst recommendations.
Profitability
This table compares Carlyle Secured Lending and Gladstone Investment’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Carlyle Secured Lending | 19.52% | 8.99% | 4.01% |
| Gladstone Investment | 186.47% | 6.05% | 2.90% |
Analyst Ratings
This is a breakdown of recent ratings and recommmendations for Carlyle Secured Lending and Gladstone Investment, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Carlyle Secured Lending | 0 | 4 | 3 | 0 | 2.43 |
| Gladstone Investment | 0 | 1 | 3 | 0 | 2.75 |
Institutional & Insider Ownership
24.5% of Carlyle Secured Lending shares are held by institutional investors. Comparatively, 11.9% of Gladstone Investment shares are held by institutional investors. 0.6% of Carlyle Secured Lending shares are held by insiders. Comparatively, 2.4% of Gladstone Investment shares are held 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.
Valuation and Earnings
This table compares Carlyle Secured Lending and Gladstone Investment”s gross revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Carlyle Secured Lending | $255.57 million | 2.97 | $69.97 million | $0.71 | 15.38 |
| Gladstone Investment | $177.52 million | 3.66 | $184.75 million | $4.69 | 3.48 |
Gladstone Investment has lower revenue, but higher earnings than Carlyle Secured Lending. Gladstone Investment is trading at a lower price-to-earnings ratio than Carlyle Secured Lending, indicating that it is currently the more affordable of the two stocks.
Dividends
Carlyle Secured Lending pays an annual dividend of $1.60 per share and has a dividend yield of 14.7%. Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 5.9%. Carlyle Secured Lending pays out 225.4% 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 pays out 20.5% of its earnings in the form of a dividend.
Risk and Volatility
Carlyle Secured Lending has a beta of 0.66, suggesting that its stock price is 34% less volatile than the S&P 500. Comparatively, Gladstone Investment has a beta of 0.81, suggesting that its stock price is 19% less volatile than the S&P 500.
Summary
Gladstone Investment beats Carlyle Secured Lending on 8 of the 15 factors compared between the two stocks.
About Carlyle Secured Lending
Carlyle Secured Lending, Inc. is business development company specializing in first lien debt, senior secured loans, second lien senior secured loan unsecured debt, mezzanine debt and investments in equities. It specializes in directly investing. It specializes in middle market. It targets healthcare and pharmaceutical, aerospace and defense, high tech industries, business services, software, beverage food and tobacco, hotel gamming and leisure, banking finance insurance and in real estate sector. The fund seeks to invest across United States of America, Luxembourg, Cayman Islands, Cyprus, and United Kingdom. It invests in companies with EBITDA between $25 million and $100 million.
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.
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