Comparing Chicago Atlantic BDC (NASDAQ:LIEN) & Gladstone Investment (NASDAQ:GAIN)

Chicago Atlantic BDC (NASDAQ:LIEN) and Gladstone Investment (NASDAQ:GAIN) are both small-cap finance companies, but which is the superior business? We will compare the two companies based on the strength of their risk, analyst recommendations, valuation, profitability, dividends, earnings and institutional ownership.

Analyst Ratings

This is a summary of recent recommendations and price targets for Chicago Atlantic BDC and Gladstone Investment, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Chicago Atlantic BDC	0	3	0	0	2.00
Gladstone Investment	0	4	1	0	2.20

Profitability

This table compares Chicago Atlantic BDC and Gladstone Investment’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Chicago Atlantic BDC	33.72%	5.80%	5.46%
Gladstone Investment	94.99%	7.12%	3.34%

Volatility and Risk

Chicago Atlantic BDC has a beta of 0.26, meaning that its stock price is 74% less volatile than the S&P 500. Comparatively, Gladstone Investment has a beta of 0.84, meaning that its stock price is 16% less volatile than the S&P 500.

Dividends

Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 13.0%. Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 6.9%. Chicago Atlantic BDC pays out 172.2% 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 Investment pays out 38.4% of its earnings in the form of a dividend.

Insider & Institutional Ownership

4.4% of Chicago Atlantic BDC shares are held by institutional investors. Comparatively, 11.9% of Gladstone Investment shares are held by institutional investors. 16.9% of Chicago Atlantic BDC shares are held by insiders. Comparatively, 2.4% of Gladstone Investment shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Valuation and Earnings

This table compares Chicago Atlantic BDC and Gladstone Investment”s gross revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Chicago Atlantic BDC	$21.67 million	11.06	$9.62 million	$0.79	13.29
Gladstone Investment	$93.66 million	5.88	$65.32 million	$2.50	5.56

Gladstone Investment has higher revenue and earnings than Chicago Atlantic BDC. Gladstone Investment is trading at a lower price-to-earnings ratio than Chicago Atlantic BDC, indicating that it is currently the more affordable of the two stocks.

Summary

Gladstone Investment beats Chicago Atlantic BDC on 10 of the 15 factors compared between the two stocks.

About Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.

About Gladstone Investment

Gladstone Investment Corporation is business development company, specializes in lower middle market, mature stage, buyouts; refinancing existing debt; senior debt securities such as senior loans, senior term loans, lines of credit, and senior notes; senior subordinated debt securities such as senior subordinated loans and senior subordinated notes; junior subordinated debt securities such as subordinated notes and mezzanine loans; limited liability company interests, and warrants or options. The fund does not invest in start-ups. The fund seeks to invest in manufacturing, consumer products and business/consumer services sector. It seeks to invest in small and mid-sized companies based in the United States. The fund prefers to make debt investments between $5 million and $30 million and equity investments between $10 million and $40 million in companies. The fund seeks to invest in companies with revenue between $20 million and $100 million. The fund invests in companies with EBITDA from $3 million to $20 million. It seeks minority equity ownership and prefers to hold a board seat in its portfolio companies. It also prefers to take majority stake in its portfolio companies. The fund typically holds the investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.