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Great Elm Capital Corporation (GECC)
NASDAQ:GECC
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Great Elm Capital
(NASDAQ:GECC)
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Rating:48Neutral
Price Target:―
Great Elm Capital Corporation's overall stock score reflects a blend of both strengths and challenges. Strong operational efficiency and a high dividend yield are counterbalanced by financial instability and liquidity concerns. Technical indicators and a positive earnings call sentiment offer some optimism, but the high P/E ratio and cash flow issues weigh on the score.
Great Elm Capital (GECC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$102.26M
Dividend Yield17.08%
Average Volume (3M)183.76K
Price to Earnings (P/E)5.6
Beta (1Y)0.42
Revenue Growth52.57%
EPS Growth13.36%
CountryUS
Employees1
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.51
Shares Outstanding11,568,378
10 Day Avg. Volume222,072
30 Day Avg. Volume183,756
Financial Highlights & Ratios
PEG Ratio-0.34
Price to Book (P/B)0.79
Price to Sales (P/S)3.43
P/FCF Ratio-1.31
Enterprise Value/Market Cap2.45
Enterprise Value/Revenue5.79
Enterprise Value/Gross Profit10.03
Enterprise Value/Ebitda14.57
Forecast
1Y Price Target
$11.25Price Target Upside27.26% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Great Elm Capital Business Overview & Revenue Model
Company DescriptionGreat Elm Capital (GECC) is a business development company that primarily invests in the debt securities of middle-market companies. Operating within the financial sector, GECC focuses on generating both current income and capital appreciation through its diversified portfolio. The company's investment strategy is centered around acquiring debt instruments that offer attractive risk-adjusted returns, thereby providing financial solutions to companies in need of capital.
How the Company Makes MoneyGreat Elm Capital makes money primarily through the interest and fees earned on its investments in debt securities. These investments include senior secured loans, bonds, and other fixed-income instruments that generate regular interest payments. Additionally, GECC may realize capital gains from the appreciation of these securities over time. The company also benefits from management and incentive fees from managed funds. Significant partnerships with financial institutions and strategic investments further enhance its revenue streams, allowing GECC to leverage its expertise in credit markets and expand its investment portfolio.
Great Elm Capital Earnings Call Summary
Earnings Call Date:Aug 04, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Oct 30, 2025
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with record-setting investment income and net investment income growth driven by strategic portfolio enhancements and a successful CLO platform. Despite challenges with nonaccrual investments and tariff impacts, the company's overall trajectory remains positive.Q2-2025 Updates
Positive Updates
Record Total Investment Income
GECC delivered the highest total investment income in its history at $14.3 million, with a 14% increase from the previous quarter and nearly 50% year-over-year growth.
Significant Growth in Net Investment Income
Net investment income increased by approximately 29% sequentially, with NII per share rising to $0.51 from $0.40 in the prior quarter.
Strong Portfolio Performance
NAV per share grew over $0.60 from the prior quarter to $12.10. Unrealized gains from the investment in CW Opportunity 2 LP contributed to this growth.
CLO Platform Success
The growing CLO platform was a significant driver of income, contributing $4.3 million in cash distributions, up from $3.8 million last quarter.
Dividend Yield and Distribution
Authorized a $0.37 per share cash distribution for the third quarter, equating to a 12.2% annualized dividend yield.
Successful Specialty Finance Transformation
Great Elm Specialty Finance streamlined operations, exited equipment leaseholding at a gain, and repositioned for future growth and profitability.
Negative Updates
Nonaccrual Investments
Maverick Gaming and Del Monte debt investments were placed on nonaccrual, comprising less than 3% of portfolio fair value.
Income Fluctuation from CLO JV
The uneven nature of income reporting from the CLO JV due to cash-based recognition may lead to fluctuations in quarterly income.
Potential Impact of Tariffs
The syndication process for Great Elm Commercial Finance was delayed due to industry-wide caution following tariff announcements.
Company Guidance
During the second quarter of 2025, Great Elm Capital Corp. reported its highest total investment income in the company's history at $14.3 million, with net asset value (NAV) growing by over $0.60 per share from the previous quarter to $12.10 as of June 30. The company achieved a 14% increase in total investment income (TII) from the prior quarter and a nearly 50% year-over-year increase, driven by its expanding CLO platform and other cash-generating investments. Net investment income (NII) rose 29% sequentially to $0.51 per share, supported by a $4.3 million cash distribution from their CLO joint venture. Great Elm anticipates a temporary step-down in NII per share in the third quarter, followed by a significant rebound in the fourth quarter, as cash flows from the CLO platform stabilize. Over the trailing 12 months, total investment income grew by 29%, and NII increased by 32%, maintaining a trailing 12-month NII of $1.50 per share. The company aims to exceed 2024 NII levels, cover an annualized distribution rate of $1.48 per share, and maintain a strong portfolio underpinned by senior secured investments. As of June 30, GECC had $140 million in net assets, a NAV per share of $12.10, and an asset coverage ratio of 169.5%. The Board of Directors authorized a $0.37 per share cash distribution for the third quarter, representing a 12.2% annualized dividend yield on the June 30 NAV.Great Elm Capital Financial Statement Overview
Summary
Great Elm Capital's financial performance reflects a mix of progress and challenges. The income statement shows improvement in revenue and operational efficiency, but profitability is under pressure due to cost management issues. The balance sheet shows financial instability with liabilities exceeding equity and no debt. Cash flow is particularly concerning with a negative operating cash flow, highlighting liquidity issues.Income Statement
The income statement shows a positive turnaround in revenues, moving from negative to positive figures over the years, with a current revenue of $31.54 million in 2024. Gross profit margin is strong at 94.2% due to significant gross profit relative to revenue. However, net profit margin declined from last year, indicating potential cost management issues. Despite this, EBIT margin remains high at 89.9%, suggesting efficient operational performance.40
Negative
Balance Sheet
The balance sheet reveals a reduction in total assets and stockholders' equity, with total liabilities exceeding equity, resulting in a low equity ratio of 31.1%. The company has no debt, which is positive, but the overall financial stability is weakened by limited equity and asset base.30
Negative
Cash Flow
Cash flow analysis indicates a concerning negative operating cash flow of -$82.67 million, with no free cash flow generation. The free cash flow to net income ratio is negative due to substantial cash outflows, highlighting liquidity challenges.25
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 43.24M | 41.19M | 35.83M | -16.07M | -6.59M | -28.86M |
| Gross Profit | 24.99M | 29.73M | 30.20M | -15.98M | -6.18M | -33.18M |
| EBITDA | 17.20M | 3.55M | 25.33M | -15.33M | 17.31M | 17.04M |
| Net Income | 17.53M | 3.55M | 25.33M | -15.58M | -10.28M | -31.96M |
Balance Sheet | ||||||
| Total Assets | 409.33M | 342.03M | 246.82M | 310.11M | 426.31M | 283.33M |
| Cash, Cash Equivalents and Short-Term Investments | 960.00K | 8.45M | 953.00K | 587.00K | 9.13M | 52.58M |
| Total Debt | 196.48M | 189.69M | 140.21M | 153.15M | 142.00M | 115.66M |
| Total Liabilities | 269.29M | 205.91M | 148.09M | 225.30M | 351.76M | 203.71M |
| Stockholders Equity | 140.03M | 136.11M | 98.74M | 84.81M | 74.56M | 79.61M |
Cash Flow | ||||||
| Free Cash Flow | -19.15M | -82.67M | 25.68M | -41.76M | -58.49M | 27.39M |
| Operating Cash Flow | -19.15M | -82.67M | 25.68M | -41.76M | -58.49M | 27.39M |
| Investing Cash Flow | 0.00 | 0.00 | 0.00 | -36.47M | -56.88M | 19.47M |
| Financing Cash Flow | 17.53M | 81.72M | -25.32M | 33.20M | 14.45M | 21.19M |
Great Elm Capital Technical Analysis
Negative
8.84
Price Trends
10.74
Negative
10.49
Negative
10.03
Negative
Market Momentum
-0.38
Positive
18.36
Positive
8.94
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GECC, the sentiment is Negative. The current price of 8.84 is below the 20-day moving average (MA) of 10.74, below the 50-day MA of 10.74, and below the 200-day MA of 10.03, indicating a bearish trend. The MACD of -0.38 indicates Positive momentum. The RSI at 18.36 is Positive, neither overbought nor oversold. The STOCH value of 8.94 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GECC.
Great Elm Capital Risk Analysis
Great Elm Capital disclosed 65 risk factors in its most recent earnings report. Great Elm Capital 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
Great Elm Capital Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $102.29M | 9.98 | 6.82% | 17.81% | -53.07% | ― | |
69 Neutral | $152.53M | 79.73 | 1.01% | 14.20% | -17.51% | -75.48% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $162.24M | 45.62 | 1.21% | 25.57% | -49.76% | -84.43% | |
48 Neutral | $102.26M | 5.64 | 13.18% | 17.08% | 52.57% | 13.36% | |
45 Neutral | $128.76M | 602.56 | -0.87% | 25.45% | -569.90% | -144.29% |
* Financial Sector Average
GECC
Great Elm Capital
8.84
0.08
0.91%
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MRCC
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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.