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Saratoga Investment Corp (SAR)
NYSE:SAR
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Saratoga Investment
(NYSE:SAR)
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Rating:68Neutral
Price Target:―
Saratoga Investment's overall score reflects strong technical indicators and attractive valuation, balanced by mixed financial performance and earnings call sentiment. Revenue growth and operational efficiency are strengths, but low net margins and high leverage pose risks. The stock's upward price momentum and high dividend yield provide additional support for the score.
Positive Factors
Strong Portfolio Quality
The high percentage of first lien debt in the portfolio indicates a lower risk profile and strong asset quality, supporting long-term stability and income generation.
Cash Position
A strong cash position enhances financial flexibility, allowing the company to capitalize on investment opportunities and manage debt more effectively.
Over-Earning Dividends
Consistent over-earning of dividends indicates robust cash flow and profitability, ensuring sustainable shareholder returns and potential NAV growth.
Negative Factors
Decreased Adjusted NII
The decline in adjusted net investment income suggests potential challenges in income generation, which could impact profitability and dividend sustainability.
High Leverage Levels
High leverage can increase financial risk, particularly in rising interest rate environments, potentially affecting refinancing and financial stability.
Significant Credit Markdowns
Credit markdowns indicate potential asset quality issues, which could affect future income and valuation of the investment portfolio.
Saratoga Investment (SAR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
N/A
Dividend Yield11.8%
Average Volume (3M)94.05K
Price to Earnings (P/E)9.9
Beta (1Y)0.46
Revenue Growth44.71%
EPS Growth52.98%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)0.58
Shares Outstanding16,103,949
10 Day Avg. Volume90,698
30 Day Avg. Volume94,047
Financial Highlights & Ratios
PEG Ratio0.07
Price to Book (P/B)0.92
Price to Sales (P/S)3.84
P/FCF Ratio1.83
Enterprise Value/Market Cap10.00T>
Enterprise Value/Revenue9.39
Enterprise Value/Gross Profit18.30
Enterprise Value/Ebitda0.76
Forecast
1Y Price Target
$23.35Price Target Upside0.52% Upside
Rating ConsensusHold
Number of Analyst Covering7
EPS Forecast (FY)2.37
Revenue Forecast (FY)$125.59M
Saratoga Investment Business Overview & Revenue Model
Company DescriptionSaratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. is based in New York, New York with an additional office in Florham Park, New Jersey.
How the Company Makes MoneySaratoga Investment Corp generates revenue primarily through interest income from the debt investments it makes in middle-market businesses. These investments typically include first and second lien loans, mezzanine debt, and, to a lesser extent, equity investments. The company also earns money from capital gains when it exits equity positions in successful portfolio companies. Additionally, Saratoga Investment benefits from management and incentive fees, which are tied to the performance of the assets under management, given its role as an investment adviser. This structure allows the company to capitalize on both steady interest income and potential upside from equity investments.
Saratoga Investment Earnings Call Summary
Earnings Call Date:Oct 07, 2025
(Q2-2026)
| % Change Since: |
Next Earnings Date:Jan 14, 2026
Earnings Call Sentiment Neutral
The earnings call presented a mixed picture. While there were notable achievements in NAV growth, low nonaccrual investments, and maintaining a strong return on equity, there were significant challenges including a decrease in net interest income and adjusted NII, as well as market challenges affecting deal flow. The dividend payments remain consistent, but the gap between NII and dividends suggests potential sustainability issues.Q2-2026 Updates
Positive Updates
Strong NAV Growth
Net Asset Value (NAV) increased 10.3% from last year and 3.6% from last quarter, reaching $410.5 million.
Low Nonaccrual Investments
Nonaccrual investments reduced to just one, representing only 0.2% of portfolio fair value, with the return of Xolage to accrual status.
High Return on Equity
Latest twelve months return on equity was 9.1%, up from 5.8% last year and above the industry average of 7.3%.
Consistent Dividend Payments
Announced a base dividend of $0.25 per share per month, maintaining a 12.3% yield based on a stock price of $24.41.
Significant Investment Capacity
Maintained $407 million of investment capacity, with $201 million in cash, $136 million available from SBIC, and $70 million from credit facilities.
Negative Updates
Decreased Net Interest Income
Net interest margin decreased from $15.1 million last quarter to $13.1 million, driven by a decrease in non-CLO interest income.
Decline in Adjusted Net Investment Income
Adjusted NII was $9.1 million, down 50.1% from last year and 10.5% from last quarter.
Decreased Portfolio Yields
The yield on the core BDC portfolio decreased to 11.3% from 11.5% last quarter, and CLO yield decreased to 11.8% from 13.7%.
Economic and Market Challenges
Faced a highly competitive market with low M&A volumes and tighter spreads, impacting deal flow and deployment opportunities.
Company Guidance
In the recent conference call, Saratoga Investment Corp provided robust financial guidance for their fiscal second quarter of 2026. Key metrics highlighted included a net asset value (NAV) increase to $410.5 million, up 10.3% year-over-year and 3.6% from the previous quarter, with NAV per share rising to $25.61. The company reported net originations of $22.4 million and a $201 million cash reserve available for future investments or debt repayment. The adjusted net investment income (NII) per share was $0.58, reflecting impacts from declining short-term interest rates and repayments, although the annualized dividend yield was strong at 12.3% based on recent stock prices. Despite a decrease in net interest margin to $13.1 million, driven by a reduction in non-CLO interest income, the firm's return on equity remained robust at 9.1%, outperforming the industry average. The call also emphasized Saratoga's strategic positioning for future economic opportunities, supported by a high-quality $995.3 million portfolio, significant liquidity, and disciplined underwriting standards.Saratoga Investment Financial Statement Overview
Summary
Saratoga Investment shows strong revenue growth and operational efficiency, as evidenced by high gross and EBIT margins. However, low net profit margins imply potential challenges with non-operational costs. The balance sheet suggests moderate leverage with a stable equity base. Cash flows have improved significantly, but historical volatility indicates potential liquidity risks. Overall, the company is on a positive trajectory with opportunities for improved profitability.Income Statement
The income statement shows a strong gross profit margin at 99.84% for the TTM, indicating efficient cost management relative to revenue. However, the net profit margin is relatively low at 0.07%, highlighting potential issues with higher non-operating expenses or taxes. Revenue growth is robust, with substantial increases over the periods, particularly between the latest TTM and previous periods. EBIT and EBITDA margins are positive, showing operational efficiency, but the low net income impacts profitability.65
Positive
Balance Sheet
The balance sheet indicates a healthy equity position, with a debt-to-equity ratio of 2.06, which is manageable but slightly on the higher side for asset management firms, suggesting moderate leverage. The return on equity is modest at 6.73%, reflecting average profitability on shareholder investments. The equity ratio of 30.73% is stable, indicating a solid equity foundation relative to total assets.70
Positive
Cash Flow
Cash flow analysis reveals a significant improvement in free cash flow, with a remarkable growth rate in the TTM. The operating cash flow to net income ratio is robust at 3733.47, highlighting strong cash generation relative to net income. However, historical negative operating cash flows and high capital expenditures could pose liquidity risks if not managed.60
Neutral
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 104.27M | 94.16M | 69.55M | 69.85M | 77.46M | 39.91M |
| Gross Profit | 53.48M | 42.10M | 20.36M | 36.35M | 57.58M | 26.32M |
| EBITDA | 1.29B | 31.97M | 11.70M | 26.76M | 48.52M | 19.94M |
| Net Income | 33.41M | 28.09M | 8.93M | 24.68M | 45.74M | 14.78M |
Balance Sheet | ||||||
| Total Assets | 1.21B | 1.19B | 1.19B | 1.08B | 876.24M | 592.15M |
| Cash, Cash Equivalents and Short-Term Investments | 200.80M | 148.22M | 8.69M | 65.75M | 47.26M | 18.83M |
| Total Debt | 623.38M | 781.82M | 803.67M | 711.13M | 498.88M | 274.05M |
| Total Liabilities | 795.71M | 798.88M | 820.98M | 731.20M | 520.46M | 287.97M |
| Stockholders Equity | 410.50M | 392.67M | 370.22M | 346.96M | 355.78M | 304.19M |
Cash Flow | ||||||
| Free Cash Flow | 109.58M | 197.54M | -157.21M | -130.37M | -203.13M | -62.35M |
| Operating Cash Flow | 109.58M | 197.54M | -157.21M | -130.37M | -203.13M | -62.35M |
| Investing Cash Flow | -22.35M | 0.00 | 0.00 | 2.25B | -55.08B | -78.08B |
| Financing Cash Flow | -48.43M | -33.32M | 101.64M | 173.58M | 226.09M | 52.81M |
Saratoga Investment Technical Analysis
Positive
23.23
Price Trends
22.61
Positive
23.39
Negative
23.05
Positive
Market Momentum
0.10
Negative
65.14
Neutral
93.81
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAR, the sentiment is Positive. The current price of 23.23 is above the 20-day moving average (MA) of 22.23, above the 50-day MA of 22.61, and above the 200-day MA of 23.05, indicating a bullish trend. The MACD of 0.10 indicates Negative momentum. The RSI at 65.14 is Neutral, neither overbought nor oversold. The STOCH value of 93.81 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for SAR.
Saratoga Investment Risk Analysis
Saratoga Investment disclosed 82 risk factors in its most recent earnings report. Saratoga 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
Saratoga Investment Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $14.68B | 10.30 | 10.06% | 9.33% | 10.34% | -24.16% | |
68 Neutral | ― | 9.91 | 9.04% | 11.80% | 44.71% | 52.98% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
67 Neutral | $553.86M | 5.61 | 18.68% | 10.74% | -45.46% | 134.73% | |
66 Neutral | $991.33M | 14.73 | 5.43% | 13.40% | 36.15% | -38.59% | |
58 Neutral | $501.41M | ― | -1.15% | 22.98% | -91.81% | 78.46% | |
48 Neutral | $395.69M | 12.09 | 6.83% | 15.84% | -3.09% | 200.66% |
* Financial Sector Average
SAR
Saratoga Investment
23.23
1.22
5.54%
GAIN
Gladstone Investment
13.97
1.52
12.21%
NMFC
New Mountain Finance
9.61
-0.90
-8.56%
PNNT
Pennantpark Investment
6.06
0.15
2.54%
ARCC
Ares Capital
20.51
0.27
1.33%
TCPC
BlackRock TCP Capital
5.91
-1.97
-25.00%
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.