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Gladstone Capital Corp (GLAD)
NASDAQ:GLAD
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Gladstone Capital (GLAD) AI Stock Analysis

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GLAD

Gladstone Capital

(NASDAQ:GLAD)

Rating:70Neutral
Price Target:
Gladstone Capital's stock reflects a balanced performance with strong financial fundamentals and attractive valuation. The company's robust income growth and effective cash flow management are key strengths, although technical indicators suggest caution. The positive sentiment from the earnings call adds to its favorable outlook, making GLAD a moderately attractive investment.

Gladstone Capital (GLAD) vs. SPDR S&P 500 ETF (SPY)

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:Aug 04, 2025
(Q3-2025)
|
% Change Since: -0.64%|
Next Earnings Date:Nov 17, 2025
Earnings Call Sentiment Neutral
The earnings call presented a balanced view with strong investment activity and increased portfolio yield but also highlighted challenges such as negative net originations and declines in interest income. While growth and strategic achievements were emphasized, some financial and operational pressures were evident.
Q3-2025 Updates
Positive Updates
Strong Investment Activity
Closed 8 new investments since the last call amounting to $159 million, with a focus on growth-oriented lower middle-market businesses.
Increased Portfolio Yield
The weighted average portfolio yield rose 20 basis points to 12.8% for the quarter.
Resurgence in Portfolio Growth
Net originations for July and early August were $89 million, indicating a resurgence in portfolio growth.
Conservative Leverage Position
Ended the quarter with a conservative leverage position, with debt at 64% of NAV.
Successful Bank Line Extension
Closed a 2-year extension and upsize of the bank line, which included a reduction in the revolver borrowing margin.
Negative Updates
Net Originations Negative
Net originations were negative $9 million for the period due to elevated exits and prepayments totaling $82 million.
Decline in Interest Income
Interest income for the period fell slightly to $20.9 million, largely due to a 5.2% decline in average earning assets.
Net Realized Losses
Net realized losses were $3.6 million for the quarter, primarily related to the post-restructuring valuation of an investment in EGs.
Unrealized Depreciation Challenges
Printed circuit board investment faced a slowdown in bookings, contributing to unrealized depreciation.
Portfolio Leverage Increase
Subsequent to June 30, total leverage increased to 81% of NAV, raising concerns about financial flexibility.
Company Guidance
During the Gladstone Capital Corporation third-quarter 2025 earnings call, several key financial metrics and guidance were highlighted. The company reported fundings of $73 million and exits and prepayments totaling $82 million, resulting in net originations of negative $9 million for the quarter. Interest income slightly decreased to $20.9 million due to a 5.2% decline in average earning assets, although the weighted average portfolio yield increased by 20 basis points to 12.8%. Despite a net investment income of $11.3 million, net realized losses amounted to $3.6 million, primarily due to the post-restructuring valuation of an EGs investment. The portfolio's return on equity for the trailing twelve months was reported at 15.8%, with a first lien debt maintained at 70% of the portfolio's fair value. As of June 30, liabilities rose to $306 million, with debt at 64% of net asset value (NAV). Recent activities included $93 million in new platform investments, contributing to a net origination of $89 million for July and early August, with leverage increasing to 81% of NAV post-quarter. The company remains committed to its strategy of investing in growth-oriented lower middle-market businesses, supported by private equity sponsors, with an overall positive outlook for future portfolio growth.

Gladstone Capital Financial Statement Overview

Summary
Gladstone Capital exhibits solid revenue growth and profitability, supported by a strong balance sheet. Despite operational margin inefficiencies, the company maintains a positive cash flow trajectory, underpinned by balanced leverage and a robust equity position.
Income Statement
67
Positive
Gladstone Capital's TTM revenue growth is strong, with a notable increase from previous periods. The gross profit margin remains high, reflecting efficient cost management. However, the negative EBIT and EBITDA margins in TTM indicate operational challenges, despite a positive net profit margin enhanced by other income sources.
Balance Sheet
72
Positive
The company maintains a solid equity base, as evidenced by a high stockholders' equity to total assets ratio. The debt-to-equity ratio is moderate, suggesting manageable leverage levels. Return on equity is strong, driven by robust net income performance. Overall, the balance sheet is stable with controlled liabilities.
Cash Flow
60
Neutral
Free cash flow growth is evident, showing improvement in operational cash generation. The operating cash flow to net income ratio suggests efficient cash conversion, though historical volatility in cash flows poses potential risks. The free cash flow to net income ratio supports a positive cash flow position in the TTM period.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue97.58M96.62M86.43M32.38M94.74M8.40M
Gross Profit77.75M74.91M65.85M17.81M81.83M-819.00K
EBITDA80.82M94.72M65.04M36.93M-1.20M44.33M
Net Income75.76M94.72M42.67M19.91M84.30M-1.87M
Balance Sheet
Total Assets780.20M812.47M719.50M660.97M566.50M459.18M
Cash, Cash Equivalents and Short-Term Investments15.30M2.17M1.31M2.01M671.00K2.47M
Total Debt254.75M324.61M300.91M339.41M237.11M221.53M
Total Liabilities291.23M333.73M310.80M345.48M248.06M225.43M
Stockholders Equity488.97M478.74M408.69M315.49M318.44M233.74M
Cash Flow
Free Cash Flow77.19M3.24M-10.86M-76.40M-14.06M-46.09M
Operating Cash Flow77.19M3.24M-10.86M-76.40M-14.06M-46.09M
Investing Cash Flow8.26M0.000.00-259.05M-165.99M-147.14M
Financing Cash Flow-71.39M-2.34M10.15M77.66M12.44M32.81M

Gladstone Capital Technical Analysis

Technical Analysis Sentiment
Negative
Last Price26.57
Price Trends
50DMA
27.23
Negative
100DMA
26.17
Positive
200DMA
26.32
Positive
Market Momentum
MACD
-0.23
Positive
RSI
39.17
Neutral
STOCH
8.32
Positive
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 26.57 is below the 20-day moving average (MA) of 27.15, below the 50-day MA of 27.23, and above the 200-day MA of 26.32, indicating a neutral trend. The MACD of -0.23 indicates Positive momentum. The RSI at 39.17 is Neutral, neither overbought nor oversold. The STOCH value of 8.32 is Positive, 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

Overall Rating
UnderperformOutperform
Sector (69)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
80
Outperform
$629.92M24.967.67%6.43%
70
Neutral
$598.22M7.9516.23%8.96%47.88%-5.08%
69
Neutral
€16.94B12.5014.85%5.50%-1.68%-7.60%
68
Neutral
$752.88M9.2211.80%10.63%-14.09%-27.46%
61
Neutral
$561.85M12.725.98%12.79%-7.13%-56.63%
58
Neutral
$608.01M-1.48%19.05%-48.53%73.29%
58
Neutral
$550.56M15.47-1.27%14.58%-11.83%-108.11%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GLAD
Gladstone Capital
26.59
5.89
28.45%
FDUS
Fidus Investment
21.22
3.51
19.82%
TCPC
BlackRock TCP Capital
7.10
-0.65
-8.39%
CCAP
Crescent Capital BDC
15.14
-1.20
-7.34%
VINP
Vinci Partners Investments
9.78
-0.66
-6.32%
CION
CION Investment Corp
10.57
-0.07
-0.66%

Gladstone Capital Corporate Events

DividendsFinancial Disclosures
Gladstone Capital Declares April 2025 Cash Distributions
Neutral
Apr 8, 2025

On April 8, 2025, Gladstone Capital Corporation announced that its board of directors declared monthly cash distributions for its common stock and 6.25% Series A Cumulative Redeemable Preferred Stock for April, May, and June 2025. Additionally, the company plans to report its second fiscal quarter earnings on May 6, 2025, with a conference call scheduled for May 7, 2025, to discuss the results, potentially impacting investor relations and market perceptions.

Spark’s Take on GLAD Stock

According to Spark, TipRanks’ AI Analyst, GLAD is a Neutral.

Gladstone Capital demonstrates strong revenue growth and a solid balance sheet, although operational inefficiencies are noted. Technical indicators suggest a cautious outlook with no strong momentum. The stock’s valuation is attractive with a low P/E ratio and high dividend yield. The earnings call was positive overall, highlighting new investments and income growth, though tempered by reduced portfolio yields.

To see Spark’s full report on GLAD stock, click here.

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: May 04, 2025