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Gladstone Capital (GLAD)
NASDAQ:GLAD
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Gladstone Capital
(NASDAQ:GLAD)
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Rating:70Outperform
Price Target:
$22.50
â–²(12.39% Upside)
The score is driven by attractive valuation (low P/E and high yield) and a supportive earnings-call backdrop (portfolio growth, conservative leverage, refinancing). Offsetting factors are uneven cash-flow performance and profitability volatility, plus a weaker longer-term technical trend despite some near-term oversold signals.
Positive Factors
Revenue Growth
Consistent revenue growth indicates successful investment strategies and effective portfolio management, enhancing long-term business sustainability.
Strong Balance Sheet
A strong balance sheet with manageable leverage provides financial stability and flexibility for future growth opportunities.
Net Investment Income Increase
An increase in net investment income reflects effective cost management and enhances the company's ability to generate shareholder returns.
Negative Factors
Operational Margin Inefficiencies
Operational inefficiencies could strain profitability, requiring strategic adjustments to maintain long-term financial health.
Foreclosure on Investments
Foreclosures and restructuring can disrupt cash flows and indicate potential risks in investment selection and management.
Decline in Portfolio Yield
A declining portfolio yield may impact future income generation, necessitating strategic reassessment to sustain returns.
Gladstone Capital (GLAD) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$458.19M
Dividend Yield9.31%
Average Volume (3M)157.54K
Price to Earnings (P/E)8.0
Beta (1Y)0.65
Revenue Growth41.12%
EPS Growth-40.68%
CountryUS
Employees73
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.50
Shares Outstanding22,593,070
10 Day Avg. Volume166,304
30 Day Avg. Volume157,540
Financial Highlights & Ratios
PEG Ratio-0.21
Price to Book (P/B)1.01
Price to Sales (P/S)3.38
P/FCF Ratio11.21
Enterprise Value/Market Cap1.78
Enterprise Value/Revenue10.53
Enterprise Value/Gross Profit14.19
Enterprise Value/Ebitda14.07
Forecast
1Y Price Target
$22.40Price Target Upside11.89% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)1.92
Revenue Forecast (FY)$98.64M
Gladstone Capital Business Overview & Revenue Model
Company DescriptionGladstone Capital Corporation is a business development company specializing in lower middle market, growth capital, add on acquisitions, change of control, buy & build strategies, debt refinancing, debt investments in senior term loans, revolving loans, secured first and second lien term loans, senior subordinated loans, unitranche loans, junior subordinated loans, and mezzanine loans and equity investments in the form of common stock, preferred stock, limited liability company interests, or warrants. It operates as a business development company. The fund also makes private equity investments in acquisitions, buyouts and recapitalizations, and refinancing existing debts. It targets small and medium-sized companies in United States. It is industry agnostic and seeks to invest in companies engaged in the business services, light and specialty manufacturing, niche industrial products and services, specialty consumer products and services, energy services, transportation and logistics, healthcare and education services, specialty chemicals, media and communications and aerospace and defense. The fund seeks to invest between $7 million and $30 million in companies that have between $20 million and $150 million in sales and EBITDA between $3 million and $25 million. It prefers to acquire minority stakes. It seeks to exit its investments through strategic acquisitions by other industry participants or financial buyers, initial public offerings of common stock, or other capital market transactions.
How the Company Makes MoneyGladstone Capital makes money primarily through the interest income generated from its portfolio of debt investments, which includes senior and subordinated loans. These loans are extended to small and medium-sized businesses, and the interest payments received form a significant portion of the company's revenue. In addition to interest income, Gladstone Capital also earns money through capital gains realized from the sale of equity investments and loan prepayments. The company may also charge fees related to the structuring and management of its investment deals. Furthermore, Gladstone Capital benefits from its strategic partnerships and relationships with financial institutions, which can provide additional investment opportunities and funding sources. The company's performance is influenced by factors such as interest rate fluctuations, credit risk management, and the overall economic environment affecting its portfolio companies.
Gladstone Capital Earnings Call Summary
Earnings Call Date:Nov 17, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:May 05, 2026
Earnings Call Sentiment Positive
The earnings call demonstrated strong financial performance with significant growth in investment portfolio value and return on equity. The company managed to overcome repayment challenges and expand its private equity relationships, although it faced some realized losses and a decline in portfolio yield. The reduction in the dividend indicates caution amidst potential interest rate declines.Q4-2025 Updates
Positive Updates
Strong Fundings and Net Originations
Fundings totaled $126.6 million with net originations at $103.1 million, showcasing strong investment activity.
Interest Income Growth
Interest income rose 14% to $23.8 million, driven by a 16.2% increase in average earning assets.
Record Investment Portfolio Growth
15 new investments totaling $397 million were sourced, contributing to a $63 million increase in the fair value of the investment portfolio.
Impressive Return on Equity
Return on Equity (ROE) for the trailing twelve months was 11.9%, with a five-year return of 16.75%, positioning the company at the top among peers.
Debt Recapitalization and Strong Leverage Position
Successfully refinanced debt with a $149 million convertible issue, maintaining a conservative leverage position at 2.5% of NAV.
Healthy Pipeline and Expanded PE Sponsor Relationships
Continued strong flow of attractive investment opportunities and expanded private equity sponsor relationships.
Negative Updates
Net Realized Losses
Net realized losses were $6.3 million due to the exit of a legacy oil and gas services investment.
Decline in Portfolio Yield
Weighted average portfolio yield declined by 30 basis points to 12.5%.
Dividend Reduction
Quarterly dividend reduced to $0.45 per share, reflecting a cautious approach amid potential rate declines.
Company Guidance
During the Gladstone Capital Corporation Fourth Quarter 2025 Earnings Call, significant financial metrics and guidance were provided. The company reported fundings of $126.6 million and exits and prepayments of $23.5 million, resulting in net originations of $103.1 million. Interest income rose by 14% to $23.8 million, despite a 30 basis point decline in the portfolio yield to 12.5%. The net investment income was $11.4 million with a notable 11.9% return on equity (ROE) for the trailing twelve months. The portfolio consisted of 72% first lien debt, and non-earning debt investments totaled 1.7%. Gladstone Capital maintained a conservative leverage position, with net debt at 2.5% of NAV, and completed a $149 million convertible issue to refinance its 2026 debt maturity. The company also announced monthly distributions of $0.15 per share with a current yield of approximately 9.6%, while expressing cautious optimism about the lower middle market's resilience and the future growth of its investment portfolio.Gladstone Capital Financial Statement Overview
Summary
Strong recent revenue growth and solid 2025 profitability, but quality is tempered by meaningful margin compression vs. 2024, rising absolute debt, and uneven cash generation (free cash flow down sharply in 2025 and prior-year cash burn).Income Statement
Revenue has expanded sharply over the last three annual periods (2023–2025), with 2025 revenue up ~51% year over year. Profitability is strong in absolute terms (2025 net margin ~40% and EBIT margin ~56%), but earnings power looks less consistent than top-line growth: net margin compressed meaningfully versus 2024 (~79% to ~40%), and earlier years show more volatility (including a loss in 2020). Overall, solid growth and healthy margins, tempered by year-to-year profit swings.78
Positive
Balance Sheet
The capital structure is reasonable for the business, with debt-to-equity below 1.0 in 2023–2025 (2025 ~0.79), improving from a more levered 2022 (~1.08). Equity has grown steadily alongside assets, supporting balance-sheet expansion. That said, total debt has risen materially (2023 to 2025), and returns on equity have cooled versus the 2024 peak (~19.8% in 2024 to ~11.6% in 2025), indicating profitability is not keeping pace with balance-sheet growth.66
Positive
Cash Flow
Cash generation is uneven. Operating cash flow and free cash flow turned positive in 2024 and improved further in 2025 ($43.6M), but 2025 free cash flow declined sharply versus 2024 (down ~43%), and earlier years included sizable cash burn (notably 2022). Cash conversion relative to the balance sheet is modest in 2025 (operating cash flow is ~11% of total debt), suggesting less cash flexibility despite positive free cash flow.45
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 77.63M | 144.76M | 120.26M | 65.83M | 33.03M | 97.55M |
| Gross Profit | 57.64M | 126.33M | 98.55M | 44.98M | 20.06M | 86.04M |
| EBITDA | 58.11M | 122.28M | 94.72M | 42.67M | 19.91M | 84.30M |
| Net Income | 58.11M | 58.11M | 94.72M | 42.67M | 19.91M | 84.30M |
Balance Sheet | ||||||
| Total Assets | 907.60M | 907.60M | 812.47M | 719.50M | 660.97M | 566.50M |
| Cash, Cash Equivalents and Short-Term Investments | 32.37M | 32.37M | 2.17M | 1.31M | 2.01M | 671.00K |
| Total Debt | 397.86M | 397.86M | 324.61M | 300.91M | 339.41M | 237.11M |
| Total Liabilities | 425.56M | 425.56M | 333.73M | 310.80M | 345.48M | 248.06M |
| Stockholders Equity | 482.04M | 482.04M | 478.74M | 408.69M | 315.49M | 318.44M |
Cash Flow | ||||||
| Free Cash Flow | -13.75M | 43.63M | 3.24M | -10.86M | -76.40M | -14.06M |
| Operating Cash Flow | -13.75M | 43.63M | 3.24M | -10.86M | -76.40M | -14.06M |
| Investing Cash Flow | 8.26M | -49.12M | 0.00 | 0.00 | -259.05M | -165.99M |
| Financing Cash Flow | 35.55M | 35.55M | -2.34M | 10.15M | 77.66M | 12.44M |
Gladstone Capital Technical Analysis
Negative
20.02
Price Trends
20.62
Negative
20.33
Negative
22.81
Negative
Market Momentum
-0.05
Positive
40.56
Neutral
26.31
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GLAD, the sentiment is Negative. The current price of 20.02 is below the 20-day moving average (MA) of 20.64, below the 50-day MA of 20.62, and below the 200-day MA of 22.81, indicating a bearish trend. The MACD of -0.05 indicates Positive momentum. The RSI at 40.56 is Neutral, neither overbought nor oversold. The STOCH value of 26.31 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GLAD.
Gladstone Capital Risk Analysis
Gladstone Capital disclosed 61 risk factors in its most recent earnings report. Gladstone 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
Gladstone Capital Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $458.19M | 8.04 | 11.86% | 9.31% | 41.12% | -40.68% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
63 Neutral | $528.62M | 14.71 | 4.92% | 13.20% | -20.18% | -61.90% | |
63 Neutral | $472.27M | 18.07 | 3.22% | 15.77% | -11.01% | -65.56% | |
60 Neutral | $549.10M | 5.56 | 18.68% | 11.02% | -45.46% | 134.73% | |
55 Neutral | $378.06M | 11.55 | 6.83% | 16.61% | -3.09% | 200.66% | |
50 Neutral | $432.69M | -46.58 | -1.15% | 21.13% | -91.81% | 78.46% |
* Financial Sector Average
GLAD
Gladstone Capital
20.02
-6.79
-25.32%
GAIN
Gladstone Investment
13.74
1.50
12.28%
PNNT
Pennantpark Investment
5.66
-0.47
-7.68%
TCPC
BlackRock TCP Capital
4.97
-2.70
-35.20%
CCAP
Crescent Capital BDC
14.07
-3.83
-21.40%
CION
CION Investment Corp
8.90
-0.98
-9.89%
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.