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Saratoga Investment Corp (SAR)
NYSE:SAR
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Saratoga Investment
(NYSE:SAR)
Rating:68Neutral
Price Target:―
Positive Factors
Credit Quality
Credit quality remains solid with a low percentage of loans on non-accrual and an outstanding credit quality process.
Dividend Sustainability
Dividend sustainability is supported by substantial over-earning, even with potential future Fed rate cuts.
Earnings Support
The investment portfolio is expected to grow, which should support earnings per share and net investment income to cover the new dividend.
Negative Factors
Core Net Investment Income
Core net investment income fell below the new dividend level due to previous rate cuts and a smaller average investment portfolio.
Net Asset Value
The net asset value was down by 4% due to a net loss and dividends, resulting in a lower price target.
Saratoga Investment (SAR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$359.54M
Dividend Yield11.98%
Average Volume (3M)116.95K
Price to Earnings (P/E)12.6
Beta (1Y)0.39
Revenue Growth-24.05%
EPS Growth28.25%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength80
IndustryAsset Management
Share Statistics
EPS (TTM)0.66
Shares Outstanding15,364,864
10 Day Avg. Volume87,981
30 Day Avg. Volume116,952
Financial Highlights & Ratios
PEG Ratio-0.65
Price to Book (P/B)<0.01
Price to Sales (P/S)0.00
P/FCF Ratio<0.01
Enterprise Value/Market Cap1.62K
Enterprise Value/Revenue1.63K
Enterprise Value/Gross Profit13.84K
Enterprise Value/Ebitda5.17K
Forecast
1Y Price Target
$24.94Price Target Upside2.55% Upside
Rating ConsensusHold
Number of Analyst Covering4
Saratoga Investment Business Overview & Revenue Model
Company DescriptionSaratoga Investment Corp (SAR) is a business development company that provides customized financing solutions to middle-market companies in the United States. It operates primarily in the sectors of technology, business services, and healthcare. The company focuses on delivering debt and equity capital to support growth, acquisitions, and refinancing needs, facilitating the expansion and operational success of its portfolio companies.
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:Jul 08, 2025
(Q1-2026)
| % Change Since: -2.88%|
Next Earnings Date:Oct 14, 2025
Earnings Call Sentiment Neutral
The earnings call presented a mixed sentiment. While there were significant improvements in quarterly adjusted NII and NAV, and a strategic increase in dividend yield and portfolio investments, challenges remain with a substantial year-over-year drop in adjusted NII and NAV per share. The ongoing market volatility and reduced M&A activity pose concerns for future growth, despite the company's efforts to invest in origination capabilities.Q1-2026 Updates
Positive Updates
Increase in Adjusted NII per Share
Adjusted NII per share increased by 17.9% from the previous quarter, indicating improved earnings performance.
Dividend Distribution
Announcement of a base dividend of $0.25 per share per month, or $0.75 per share in aggregate for the second quarter of fiscal 2026, representing an 11.8% yield based on the stock price.
NAV and Return on Equity Growth
NAV increased by 7.8% from last year and 0.9% from last quarter, with a return on equity of 9.3%, up from 4.4% last year and above the industry average of 7%.
Strong Portfolio Performance
The core non-CLO portfolio was marked up by $2.6 million, and the overall portfolio's fair value increased by $3.8 million during the quarter.
Low Nonaccrual Rate
Only 0.6% of investments were on nonaccrual, significantly lower than the industry average of 3.7%.
New Investments and Originations
$50.1 million invested in 2 new portfolio companies, 6 follow-ons, and new investments in multiple BB CLO debt securities.
Negative Updates
Decrease in Adjusted NII Year-over-Year
Adjusted NII was down 29.3% from last year, primarily due to lower AUM from significant repayments and lower base interest rates.
NAV Per Share Decline
NAV per share decreased from $26.85 last year to $25.52, factoring in a $0.50 reduction due to a change in the dividend payment structure.
Lower M&A Activity
Continued slower level of deal volume and M&A activity in the lower middle market, affecting new originations.
Reduced Yield
The yield on core BDC portfolio decreased from 12.6% last year to 11.5% this quarter, reflecting lower SOFR base rates.
Company Guidance
In the recent fiscal first quarter 2026 earnings call for Saratoga Investment Corp., significant metrics were highlighted. The company reported a 17.9% increase in adjusted net investment income (NII) per share from the previous quarter, reaching $0.66 per share. The net asset value (NAV) showed growth, increasing by 7.8% year-over-year to $396.4 million, while return on equity was notably strong at 9.3%, surpassing the industry average of 7%. The company made two new portfolio company investments totaling $50.1 million and announced a base dividend of $0.75 per share for the second quarter, representing an 11.8% yield based on a stock price of $25.44. The portfolio's fair value increased by $3.8 million, and the overall financial performance reflected strong underwriting practices amidst a volatile macroeconomic environment. Despite a challenging market with lower deal volumes, the company maintained a robust liquidity position with $430 million in investment capacity, positioning it well for future opportunities.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 | Mar 2025 | Mar 2024 | Mar 2023 | Mar 2022 | Mar 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 94.16M | 69.55M | 69.85M | 77.46M | 39.91M |
| Gross Profit | 42.10M | 20.36M | 36.35M | 57.58M | 26.32M |
| EBITDA | 31.97M | 11.70M | 26.76M | 48.52M | 19.94M |
| Net Income | 28.09M | 8.93M | 24.68M | 45.74M | 14.78M |
Balance Sheet | |||||
| Total Assets | 1.19B | 1.19B | 1.08B | 876.24M | 592.15M |
| Cash, Cash Equivalents and Short-Term Investments | 148.22M | 8.69M | 65.75B | 47.26M | 18.83M |
| Total Debt | 781.82M | 803.67M | 711.13M | 498.88M | 274.05M |
| Total Liabilities | 798.88M | 820.98M | 731.20M | 520.46M | 287.97M |
| Stockholders Equity | 392.67M | 370.22M | 346.96M | 355.78M | 304.19M |
Cash Flow | |||||
| Free Cash Flow | 96.46B | -157.21M | -130.37M | -203.13M | -62.35M |
| Operating Cash Flow | 96.46B | -157.21M | -130.37M | -203.13M | -62.35M |
| Investing Cash Flow | 110.64B | 0.00 | 2.25B | -55.08B | -78.08B |
| Financing Cash Flow | -87.29B | 101.64M | 173.58M | 226.09M | 52.81M |
Saratoga Investment Technical Analysis
Neutral
24.32
Price Trends
24.12
Positive
23.68
Positive
22.91
Positive
Market Momentum
0.24
Negative
48.35
Neutral
52.23
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SAR, the sentiment is Neutral. The current price of 24.32 is below the 20-day moving average (MA) of 24.39, above the 50-day MA of 24.12, and above the 200-day MA of 22.91, indicating a neutral trend. The MACD of 0.24 indicates Negative momentum. The RSI at 48.35 is Neutral, neither overbought nor oversold. The STOCH value of 52.23 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for SAR.
Saratoga Investment Risk Analysis
Saratoga Investment disclosed 83 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
Overall Rating
UnderperformOutperform
Sector (67)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $15.50B | 10.92 | 10.29% | 8.56% | 14.14% | -31.30% | |
74 Outperform | $5.43B | 10.36 | 19.31% | 5.02% | 51.80% | 12.05% | |
71 Outperform | $1.35B | 26.65 | 3.27% | 16.54% | -28.04% | -69.52% | |
68 Neutral | $359.54M | 12.60 | 9.27% | 11.98% | -24.05% | 28.25% | |
67 Neutral | $16.81B | 11.85 | 9.77% | 3.76% | 12.07% | -8.35% | |
58 Neutral | $1.60B | ― | -4.80% | 16.27% | -31.63% | -0.75% | |
58 Neutral | $665.00M | ― | -5.45% | 14.83% | 8.24% | -207.60% |
* Financial Sector Average
Performance Comparison
SAR
Saratoga Investment
24.32
4.40
22.09%
MAIN
Main Street Capital
61.40
13.21
27.41%
PSEC
Prospect Capital
3.29
-1.59
-32.58%
ARCC
Ares Capital
22.52
3.19
16.50%
TCPC
BlackRock TCP Capital
7.73
-1.56
-16.79%
GSBD
Goldman Sachs BDC
11.60
-1.74
-13.04%
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.