Critical Analysis: Solar Senior Capital (NASDAQ:SUNS) vs. Gladstone Capital Corporation (GLAD)
Solar Senior Capital (NASDAQ: SUNS) and Gladstone Capital Corporation (NASDAQ:GLAD) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, risk, institutional ownership, valuation, dividends, earnings and profitabiliy.
Risk & Volatility
Solar Senior Capital has a beta of 0.6, indicating that its stock price is 40% less volatile than the S&P 500. Comparatively, Gladstone Capital Corporation has a beta of 1.19, indicating that its stock price is 19% more volatile than the S&P 500.
Institutional and Insider Ownership
31.7% of Solar Senior Capital shares are held by institutional investors. Comparatively, 15.9% of Gladstone Capital Corporation shares are held by institutional investors. 5.6% of Solar Senior Capital shares are held by company insiders. Comparatively, 6.5% of Gladstone Capital Corporation shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.
This is a summary of recent ratings and target prices for Solar Senior Capital and Gladstone Capital Corporation, as reported by MarketBeat.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
|Solar Senior Capital||0||2||2||0||2.50|
|Gladstone Capital Corporation||1||1||1||0||2.00|
Solar Senior Capital presently has a consensus target price of $17.17, suggesting a potential downside of 0.71%. Gladstone Capital Corporation has a consensus target price of $9.08, suggesting a potential downside of 7.97%. Given Solar Senior Capital’s stronger consensus rating and higher possible upside, equities analysts clearly believe Solar Senior Capital is more favorable than Gladstone Capital Corporation.
Solar Senior Capital pays an annual dividend of $1.41 per share and has a dividend yield of 8.2%. Gladstone Capital Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 8.5%. Solar Senior Capital pays out 89.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gladstone Capital Corporation pays out 62.2% of its earnings in the form of a dividend. Gladstone Capital Corporation is clearly the better dividend stock, given its higher yield and lower payout ratio.
This table compares Solar Senior Capital and Gladstone Capital Corporation’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
|Solar Senior Capital||76.74%||7.95%||4.12%|
|Gladstone Capital Corporation||82.86%||10.03%||6.29%|
Valuation & Earnings
This table compares Solar Senior Capital and Gladstone Capital Corporation’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||EBITDA||Earnings Per Share||Price/Earnings Ratio|
|Solar Senior Capital||N/A||N/A||N/A||$1.57||11.01|
|Gladstone Capital Corporation||N/A||N/A||N/A||$1.35||7.31|
Gladstone Capital Corporation is trading at a lower price-to-earnings ratio than Solar Senior Capital, indicating that it is currently the more affordable of the two stocks.
Gladstone Capital Corporation beats Solar Senior Capital on 7 of the 13 factors compared between the two stocks.
Solar Senior Capital Company Profile
Solar Senior Capital Ltd. is a closed-end, externally managed, non-diversified management investment company. The Company’s investment objective is to seek to maximize current income consistent with the preservation of capital. The Company seeks to achieve its investment objective by directly and indirectly investing in senior loans, including first lien, unitranche, and second lien debt instruments, made to private middle-market companies whose debt is rated below investment grade, which it refers to collectively as senior loans. It may also invest in debt of public companies that are thinly traded or in equity securities. Under normal market conditions, at least 80% of the value of its net assets (including the amount of any borrowings for investment purposes) will be invested in senior loans. It invests in privately held the United States middle-market companies. Its investment activities are managed by Solar Capital Partners, LLC (Solar Capital Partners or the Investment Advisor).
Gladstone Capital Corporation Company Profile
Gladstone Capital Corporation is a closed-end, non-diversified management investment company, operating as a business development company (BDC). The objectives of the Company are to achieve and grow current income by investing in debt securities of established businesses that it believes will provide stable earnings and cash flow to pay expenses, make principal and interest payments on its outstanding indebtedness and make distributions to stockholders that grow over time, and to provide its stockholders with long-term capital appreciation in the value of its assets by investing in equity securities of established businesses that it believes can grow over time to permit it to sell its equity investments for capital gains. The Company is focused on investing in lower middle-market companies in the United States. It has investments in south, Midwest, west and northeast of the United States. Its portfolio allocation includes debt investments and equity investments.
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