Gladstone Investment (GAIN) AI Stock Analysis

• Market Cap: $552.33M
• Dividend Yield: 11.02%
• Average Volume (3M): 177.25K
• Price to Earnings (P/E): 4.5
• Beta (1Y): 0.60
• Revenue Growth: -45.46%
• EPS Growth: 134.73%
• Country: US
• Employees: 70
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): -0.16
• Shares Outstanding: 39,821,968
• 10 Day Avg. Volume: 149,113
• 30 Day Avg. Volume: 177,249
• PEG Ratio: -0.27
• Price to Book (P/B): 0.98
• Price to Sales (P/S): 5.46
• P/FCF Ratio: 4.31
• Enterprise Value/Market Cap: 2.02
• Enterprise Value/Revenue: 9.90
• Enterprise Value/Gross Profit: 13.83
• Enterprise Value/Ebitda: 19.25
• 1Y Price Target: $14.83
• Price Target Upside: 5.70% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 3
• EPS Forecast (FY): 0.49
• Revenue Forecast (FY): $100.03M

• Rating: 61 Neutral
• Price Target: $14.50 ▲(3.35% Upside)
• Action: Reiterated Date: 02/19/26
• Date: Action: Reiterated 02/19/26

The score is held back primarily by weakening revenue and, especially, the sharp deterioration to negative TTM cash flow, despite strong reported profitability. Valuation is a key offset with a low P/E and high dividend yield, while technicals are neutral-to-slightly supportive. The latest earnings call and financing activity indicate balance sheet management and NAV progress, but near-term earnings/expense volatility and non-accrual risk remain notable.

Positive Factors

NAV and portfolio appreciation

A quarter-over-quarter NAV rise (+10.5%) driven by $1.77/share unrealized appreciation indicates durable portfolio mark-ups and successful valuation management. Sustained NAV expansion strengthens the equity cushion for debt, supports distributable capital, and signals management's ability to create long-term value from investments.

Liquidity and balance sheet coverage

A 201% asset coverage ratio well above regulatory minimums and a $300M committed facility provide durable liquidity and borrowing capacity. This structural buffer supports deal activity, refinancing needs and redemptions over business cycles, reducing short-term refinancing risk and enabling steady execution of the BDC strategy.

Yield protections and underwriting discipline

High interest-rate floors and disciplined underwriting preserve portfolio yield even if benchmark rates decline. Structurally, floors protect net investment income and margins, making cash generation less sensitive to short-term rate moves and supporting longer-term distribution sustainability for a floating-rate focused lending business.

Negative Factors

Negative operating and free cash flow

A material TTM cash flow swing to -$81.8M signals weaker cash realization from the portfolio versus accounting profits. For a BDC that pays regular dividends, persistent negative operating/free cash flow erodes internal funding for distributions, raises reliance on capital markets or realized gains, and limits financial flexibility over months.

Revenue decline and earnings volatility

A near-15% TTM revenue decline and choppy historical trends reduce predictability of interest income and fee revenue. That instability increases sensitivity to credit cycles and underwriting timing, making it harder to sustain margins and distributable income consistently across a 2-6 month horizon without relying on one-time portfolio gains.

Non-accruals and rising incentive expenses

Ongoing non-accruals and a sizable capital-gains incentive accrual raise both credit and expense volatility. Until non-accruals are resolved they suppress cash receipts; larger incentive accruals can reduce distributable earnings. Together they heighten the risk to sustainable NII and cash available for dividends.

Gladstone Investment Business Overview & Revenue Model

Company Description

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.

How the Company Makes Money

Gladstone Investment makes money primarily through its investments in private companies, which yield returns in several ways. The company earns interest income from debt investments, typically in the form of loans to its portfolio companies, which are often structured with higher interest rates due to the higher risk associated with small to mid-sized businesses. Additionally, GAIN generates revenue from equity investments, receiving dividends and potential capital gains when portfolio companies grow and either go public or are sold. The company also benefits from management fees associated with its investment operations and may have performance-based fees depending on the success of its investments. Significant partnerships with financial institutions and investment networks can enhance its deal flow and investment opportunities, further contributing to its earnings.

Gladstone Investment Financial Statement Overview

Summary

Reported profitability is strong, but the financial profile is undermined by a material TTM revenue decline (-14.8%) and, most importantly, a sharp swing to negative TTM operating/free cash flow (-$81.8M). Balance sheet leverage is moderate (debt-to-equity ~0.85), which heightens sensitivity to earnings and asset-value volatility.

Income Statement

TTM (Trailing-Twelve-Months) revenue declined (-14.8%), following a nearly flat most recent annual period and a choppy multi-year revenue path. Profitability appears very strong on reported margins (TTM net margin ~79% and EBIT margin ~79%), and return on equity is solid in the latest periods, but the large year-to-year swings in margins and growth suggest earnings quality/recurrence may be less stable than the headline profitability implies.

Balance Sheet

Leverage is moderate for the profile: total debt is sizable ($443M TTM) with debt-to-equity around ~0.85 (down from ~0.91 most recent annual), and equity is meaningful ($595M TTM) against $1.24B in assets. Returns on equity improved versus earlier years, which is a positive, but the balance sheet still carries enough leverage that earnings or asset-value volatility could pressure flexibility.

Cash Flow

Cash generation is the main weak spot: TTM operating cash flow and free cash flow are both negative (-$81.8M), a sharp reversal versus the prior annual period’s strong positive free cash flow (~$113.9M). The large decline in free cash flow growth and the swing from positive to negative cash flow indicate higher volatility in cash realizations and reduced near-term financial flexibility despite strong reported net income.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	112.66M	89.88M	103.17M	48.53M	112.23M	53.17M
Gross Profit	80.66M	61.63M	79.05M	32.66M	99.15M	48.73M
EBITDA	57.95M	65.32M	85.31M	35.55M	102.32M	42.45M
Net Income	130.35M	65.32M	85.31M	35.55M	102.32M	42.45M
Balance Sheet
Total Assets	1.24B	1.01B	938.08M	765.64M	740.41M	643.73M
Cash, Cash Equivalents and Short-Term Investments	1.38M	14.30M	2.46M	2.68M	14.19M	2.06M
Total Debt	571.84M	455.71M	398.35M	292.61M	261.35M	243.59M
Total Liabilities	641.21M	507.32M	445.37M	325.90M	294.58M	261.37M
Stockholders Equity	595.41M	499.08M	492.71M	439.74M	445.83M	382.36M
Cash Flow
Free Cash Flow	-81.82M	113.92M	85.99M	-4.50M	77.94M	44.81M
Operating Cash Flow	-81.82M	113.92M	85.99M	-4.50M	77.94M	44.81M
Investing Cash Flow	-91.76M	-97.62M	-155.92M	-98.22M	-41.34M	-74.54M
Financing Cash Flow	5.49M	-4.37M	69.91M	-6.74M	-24.50M	28.07M

Gladstone Investment Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 14.03
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: 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 14.03 is above the 20-day moving average (MA) of 13.85, above the 50-day MA of 13.78, and above the 200-day MA of 13.59, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 57.69 is Neutral, neither overbought nor oversold. The STOCH value of 74.37 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for GAIN.

Gladstone Investment Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
CION	63 Neutral	$435.07M	16.64	3.22%	15.77%	-11.01%	-65.56%
GAIN	61 Neutral	$552.33M	4.47	22.16%	11.02%	-45.46%	134.73%
GLAD	59 Neutral	$409.39M	12.02	7.40%	9.31%	41.12%	-40.68%
PNNT	59 Neutral	$325.17M	12.70	5.38%	16.61%	-3.09%	200.66%
CCAP	58 Neutral	$476.46M	13.26	4.77%	13.20%	-20.18%	-61.90%
TCPC	50 Neutral	$384.33M	―	-1.15%	21.13%	-91.81%	78.46%

Gladstone Investment Corporate Events

Gladstone Investment Issues $115 Million in Unsecured Notes

Gladstone Investment Corporation has issued up to $115 million of 7.125% unsecured notes due May 1, 2031, under a supplemental indenture executed with UMB Bank on February 18, 2026. The notes, which closed the same day, rank pari passu with the company’s existing unsecured debt, pay interest quarterly beginning May 1, 2026, and are redeemable at par on or after May 1, 2028.

Proceeds from the offering will be used to repay a portion of borrowings under Gladstone Investment’s credit facility, fund new investment opportunities and for general corporate purposes, with the company planning to re-borrow under the facility to continue investing in portfolio companies as conditions permit. The indenture also imposes covenants tying leverage and reporting obligations to Investment Company Act standards, providing noteholders with structural protections while supporting the firm’s ongoing growth strategy in the lower middle-market financing space.

The most recent analyst rating on (GAIN) stock is a Buy with a $15.50 price target. To see the full list of analyst forecasts on Gladstone Investment stock, see the GAIN Stock Forecast page.

Gladstone Investment Prices $100 Million Notes Offering

On February 10, 2026, Gladstone Investment Corporation entered into an underwriting agreement with Gladstone Management Corporation, Gladstone Administration, LLC and Oppenheimer & Co. Inc., as representative of the underwriters, for the issuance and sale of $100 million aggregate principal amount of 7.125% notes due 2031. The underwriters were granted a 30-day option to purchase up to an additional $15 million of these notes to cover overallotments.

The offering, made under Gladstone Investment’s effective shelf registration statement, is expected to close on February 18, 2026, subject to customary closing conditions. The transaction is poised to provide the company with additional long-term capital, potentially enhancing its ability to fund new investments and support portfolio companies, which could strengthen its position in the lower middle-market financing segment.

The most recent analyst rating on (GAIN) stock is a Hold with a $14.50 price target. To see the full list of analyst forecasts on Gladstone Investment stock, see the GAIN Stock Forecast page.