MFS Charter Income Trust (NYSE: MCR) and Gladstone Capital Corporation (NASDAQ:GLAD) are both financials companies, but which is the better stock? We will contrast the two businesses based on the strength of their risk, analyst recommendations, earnings, valuation, institutional ownership, dividends and profitability.

Institutional and Insider Ownership

14.5% of Gladstone Capital Corporation shares are owned by institutional investors. 6.5% of Gladstone Capital Corporation shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Valuation & Earnings

This table compares MFS Charter Income Trust and Gladstone Capital Corporation’s revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
MFS Charter Income Trust N/A N/A N/A N/A N/A
Gladstone Capital Corporation N/A N/A N/A $1.35 6.77

Profitability

This table compares MFS Charter Income Trust and Gladstone Capital Corporation’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
MFS Charter Income Trust N/A N/A N/A
Gladstone Capital Corporation 85.01% 9.88% 6.26%

Dividends

Gladstone Capital Corporation pays an annual dividend of $0.84 per share and has a dividend yield of 9.2%. MFS Charter Income Trust does not pay a dividend. Gladstone Capital Corporation pays out 62.2% of its earnings in the form of a dividend.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for MFS Charter Income Trust and Gladstone Capital Corporation, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
MFS Charter Income Trust 0 0 0 0 N/A
Gladstone Capital Corporation 1 1 1 0 2.00

Gladstone Capital Corporation has a consensus target price of $9.08, indicating a potential downside of 0.62%. Given Gladstone Capital Corporation’s higher possible upside, analysts clearly believe Gladstone Capital Corporation is more favorable than MFS Charter Income Trust.

Summary

Gladstone Capital Corporation beats MFS Charter Income Trust on 8 of the 9 factors compared between the two stocks.

MFS Charter Income Trust Company Profile

MFS Charter Income Trust (Fund) is a diversified closed-end management investment company. The Fund’s investment objective is to seek high current income, but may also consider capital appreciation. The Fund normally invests in debt instruments. The Fund also invests in corporate bonds of the United States and/or foreign issuers, the United States Government securities, foreign government securities, mortgage-backed and other asset-backed securities and/or debt instruments of issuers located in emerging market countries. The Fund’s portfolio comprises bonds, floating rate loans, equities, cash and cash equivalent and other. It invests in a range of Fixed income sectors, such as high yield corporates non-united states government bonds, investment grade corporates, emerging markets bonds, commercial mortgage-backed securities, asset-backed securities and collateralized debt obligations. Massachusetts Financial Services Company is the Fund’s 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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