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Gladstone Investment Corp (GAIN)
NASDAQ:GAIN
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Gladstone Investment (GAIN) AI Stock Analysis

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GAIN

Gladstone Investment

(NASDAQ:GAIN)

Rating:71Outperform
Price Target:
$16.00
â–²(12.60% Upside)
Gladstone Investment's strong valuation and positive technical indicators are the most significant factors contributing to its score. While financial performance shows robust profitability, cash flow issues and increasing debt levels pose risks. The balanced sentiment from the earnings call and positive corporate events provide additional support.

Gladstone Investment (GAIN) vs. SPDR S&P 500 ETF (SPY)

Gladstone Investment Business Overview & Revenue Model

Company DescriptionGladstone 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.
How the Company Makes MoneyGladstone Investment Corporation generates revenue through interest income from its debt investments and capital gains from its equity investments. The company primarily invests in secured first lien loans, second lien loans, and equity securities, targeting companies with strong management teams and growth potential. Additionally, GAIN may realize capital gains by exiting its equity investments when market conditions are favorable. The company also benefits from dividend income from its equity holdings. Significant partnerships with portfolio companies contribute to its earnings by enhancing the value of its investments through strategic guidance and operational support. Gladstone Investment's ability to effectively manage and grow its investment portfolio is crucial to maintaining its revenue streams.

Gladstone Investment Earnings Call Summary

Earnings Call Date:Aug 12, 2025
(Q1-2026)
|
% Change Since: |
Next Earnings Date:Nov 04, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture, with significant investments and a strong liquidity position indicating positive progress. However, challenges such as decreased total investment income, NAV decline, and economic uncertainties due to tariffs suggest caution is warranted. Overall, the sentiment is balanced with both positive achievements and notable challenges.
Q1-2026 Updates
Positive Updates
Positive Earnings and Investment Activity
GAIN produced very positive earnings results with an adjusted NII of $0.24 per share, sufficient to cover monthly distribution to shareholders. Assets increased to about $1.1 billion from $1 billion, attributed to two new buyouts.
Increased Investment in New Companies
Invested approximately $130 million in three new portfolio companies during the first quarter, compared to a total of $221 million for the entire fiscal '25.
Supplemental Distributions from Capital Gains
Made a supplemental distribution of $0.54 per share in June due to the successful exit of a portfolio company, with realized capital gains on equity.
Strong Liquidity Position
Ended the quarter with $151 million available on the line of credit and raised approximately $19.3 million in net proceeds under the common stock ATM.
Resilient Portfolio Performance
Portfolio company valuations increased in a number of companies, despite some unrealized depreciation in others.
Negative Updates
Decrease in Total Investment Income
Total investment income decreased to $23.5 million from $27.5 million in the prior quarter, mainly due to lower success fees and dividend income.
Net Asset Value Decline
NAV decreased to $12.99 per share from $13.55 per share at the end of the previous quarter, primarily due to distributions and unrealized depreciation.
Challenges with Portfolio Companies on Nonaccrual Status
Continued to have four portfolio companies on nonaccrual status, though there are no portfolio-wide credit concerns.
Economic Uncertainties and Tariff Impact
Uncertainty due to tariffs and a potentially slowing economy, notably impacting margins in some consumer-focused companies.
Company Guidance
During the first quarter of fiscal year 2026, Gladstone Investment Corporation reported several key metrics. The company achieved an adjusted net investment income (NII) of $0.24 per share, sufficient to cover its monthly distribution of $0.08 per share, equating to an annual rate of $0.96 per share. The company's assets increased to approximately $1.1 billion, up from $1 billion in the prior quarter, primarily due to the completion of two new buyouts. Investment activity was robust, with approximately $130 million invested in three new portfolio companies, compared to $221 million for the entire fiscal year 2025. The company distributed a supplemental dividend of $0.54 per share in June, resulting from realized capital gains. The net asset value (NAV) decreased to $12.99 per share, from $13.55 per share, influenced by a $0.78 per share distribution and $0.04 per share of net unrealized depreciation. The company maintains a strong liquidity position, with $151 million available on its line of credit, and a solid leverage position with an asset coverage ratio of 189%. Despite uncertainties in the economic landscape, the company remains optimistic about future buyout activities and earnings, while focusing on maintaining liquidity to support portfolio growth.

Gladstone Investment Financial Statement Overview

Summary
Gladstone Investment shows strong revenue growth and profitability, with a net profit margin of 64.53%. However, the cash flow challenges, including negative operating and free cash flows, and increasing debt levels highlight potential risks.
Income Statement
75
Positive
Gladstone Investment shows strong revenue growth with a 25.99% increase in TTM, indicating robust business expansion. The company maintains high profitability with a net profit margin of 64.53% and an EBIT margin of 64.53% in TTM. However, the gross profit margin has decreased from previous periods, suggesting rising costs or pricing pressures.
Balance Sheet
70
Positive
The company's debt-to-equity ratio of 0.94 in TTM is relatively stable, indicating a balanced approach to leveraging. Return on Equity (ROE) is healthy at 14.87%, reflecting efficient use of equity. However, the increasing debt levels over the years could pose a risk if not managed properly.
Cash Flow
40
Negative
The cash flow situation is concerning, with negative operating and free cash flows in TTM. The free cash flow growth rate is significantly negative, indicating potential liquidity issues. The operating cash flow to net income ratio is negative, suggesting that earnings are not translating into cash effectively.
BreakdownTTMDec 2025Dec 2024Dec 2023Dec 2022Dec 2021
Income Statement
Total Revenue113.24M89.88M103.17M48.53M112.23M53.17M
Gross Profit87.57M61.63M79.05M32.66M99.15M48.73M
EBITDA89.03M65.32M85.31M35.55M102.32M42.45M
Net Income79.62M65.32M85.31M35.55M102.32M42.45M
Balance Sheet
Total Assets1.05B1.01B938.08M765.64M740.41M643.73M
Cash, Cash Equivalents and Short-Term Investments5.36M14.30M2.46M2.68M14.19M2.06M
Total Debt456.36M455.71M398.35M292.61M261.35M243.59M
Total Liabilities568.61M507.32M445.37M325.90M294.58M261.37M
Stockholders Equity485.30M499.08M492.71M439.74M445.83M382.36M
Cash Flow
Free Cash Flow-43.79M16.31M-69.94M-4.50M36.60M-29.73M
Operating Cash Flow-43.79M16.31M-69.94M-4.50M36.60M-29.73M
Investing Cash Flow-139.48M0.00-155.92M-98.22M-42.72M-64.22M
Financing Cash Flow42.15M-4.37M69.91M-6.74M-24.50M28.07M

Gladstone Investment Technical Analysis

Technical Analysis Sentiment
Positive
Last Price14.21
Price Trends
50DMA
14.03
Positive
100DMA
13.78
Positive
200DMA
13.08
Positive
Market Momentum
MACD
0.03
Negative
RSI
56.77
Neutral
STOCH
69.40
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GAIN, the sentiment is Positive. The current price of 14.21 is above the 20-day moving average (MA) of 14.14, above the 50-day MA of 14.03, and above the 200-day MA of 13.08, indicating a bullish trend. The MACD of 0.03 indicates Negative momentum. The RSI at 56.77 is Neutral, neither overbought nor oversold. The STOCH value of 69.40 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GAIN.

Gladstone Investment Risk Analysis

Gladstone Investment disclosed 12 risk factors in its most recent earnings report. Gladstone Investment reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Gladstone Investment Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$540.42M6.5016.54%10.61%33.75%6.20%
70
Outperform
$587.80M13.315.98%12.13%-7.13%-56.63%
70
Neutral
$585.27M7.7216.23%9.14%47.88%-5.08%
68
Neutral
$18.06B11.9710.24%3.74%9.75%1.30%
58
Neutral
$537.01M15.47-1.27%14.54%-11.83%-108.11%
55
Neutral
$451.37M25.023.46%12.74%0.36%-80.23%
48
Neutral
$468.83M33.352.89%13.26%-35.46%-67.15%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GAIN
Gladstone Investment
14.21
3.49
32.56%
GLAD
Gladstone Capital
26.05
5.41
26.21%
PNNT
Pennantpark Investment
7.22
1.19
19.73%
CCAP
Crescent Capital BDC
15.94
-0.14
-0.87%
CION
CION Investment Corp
10.25
0.17
1.69%
PSBD
Palmer Square Capital BDC Inc.
13.81
-0.78
-5.35%

Gladstone Investment Corporate Events

Executive/Board ChangesShareholder Meetings
Gladstone Investment’s 2025 Annual Meeting Approvals
Positive
Aug 7, 2025

On August 7, 2025, Gladstone Investment Corporation held its 2025 Annual Meeting of Stockholders, where stockholders approved all proposals presented, including the election of two directors and the ratification of PricewaterhouseCoopers LLP as the independent accounting firm for the fiscal year ending March 31, 2026. These approvals reflect strong shareholder support and are expected to positively influence the company’s governance and financial oversight, reinforcing its position in the financial services industry.

DividendsFinancial Disclosures
Gladstone Investment Declares Monthly Cash Distributions
Positive
Jul 10, 2025

On July 10, 2025, Gladstone Investment Corporation announced that its board of directors declared monthly cash distributions of $0.08 per share for its common stockholders for July, August, and September 2025. Additionally, the company plans to report its earnings for the first fiscal quarter ended June 30, 2025, on August 12, 2025, followed by a conference call on August 13, 2025, to discuss the results. This announcement highlights the company’s ongoing commitment to providing returns to its shareholders and maintaining transparency with its financial performance.

Private Placements and FinancingBusiness Operations and Strategy
Gladstone Investment Updates Sales Agreements with M&T Securities
Neutral
Jun 3, 2025

On June 2, 2025, Gladstone Investment Corporation announced amendments to its sales agreements with several sales agents, including the addition of M&T Securities, Inc. as a new sales agent. These agreements allow for the issuance of up to $75 million of common stock, with M&T acting as a sales agent under mutually agreed terms and earning a commission of up to 2.0% on sales, while also being indemnified against certain liabilities.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Aug 19, 2025