Analyzing Hercules Capital (HTGC) and Gladstone Investment (GAIN)
Hercules Capital (NYSE: HTGC) and Gladstone Investment (NASDAQ:GAIN) are both small-cap financials companies, but which is the better business? We will contrast the two companies based on the strength of their institutional ownership, dividends, profitability, earnings, analyst recommendations, risk and valuation.
This is a summary of current recommendations and price targets for Hercules Capital and Gladstone Investment, as provided by MarketBeat.com.
|Sell Ratings||Hold Ratings||Buy Ratings||Strong Buy Ratings||Rating Score|
Hercules Capital pays an annual dividend of $1.24 per share and has a dividend yield of 9.4%. Gladstone Investment pays an annual dividend of $0.78 per share and has a dividend yield of 6.9%. Hercules Capital pays out 136.3% 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 57.8% of its earnings in the form of a dividend.
Insider & Institutional Ownership
38.8% of Hercules Capital shares are owned by institutional investors. Comparatively, 17.4% of Gladstone Investment shares are owned by institutional investors. 3.2% of Hercules Capital shares are owned by insiders. Comparatively, 2.4% of Gladstone Investment shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock will outperform the market over the long term.
This table compares Hercules Capital and Gladstone Investment’s net margins, return on equity and return on assets.
|Net Margins||Return on Equity||Return on Assets|
Valuation & Earnings
This table compares Hercules Capital and Gladstone Investment’s revenue, earnings per share (EPS) and valuation.
|Gross Revenue||Price/Sales Ratio||Net Income||Earnings Per Share||Price/Earnings Ratio|
|Hercules Capital||$175.05 million||6.37||$68.70 million||$0.91||14.56|
|Gladstone Investment||$51.88 million||7.07||$44.76 million||$1.35||8.35|
Hercules Capital has higher revenue and earnings than Gladstone Investment. Gladstone Investment is trading at a lower price-to-earnings ratio than Hercules Capital, indicating that it is currently the more affordable of the two stocks.
Volatility and Risk
Hercules Capital has a beta of 0.87, indicating that its stock price is 13% less volatile than the S&P 500. Comparatively, Gladstone Investment has a beta of 0.74, indicating that its stock price is 26% less volatile than the S&P 500.
Hercules Capital beats Gladstone Investment on 12 of the 16 factors compared between the two stocks.
Hercules Capital Company Profile
Hercules Capital, Inc. is a specialty finance company. The Company is an internally managed, non-diversified, closed-end investment company. The Company focuses on providing senior secured venture growth loans to venture capital-backed companies in a range of technology, life sciences, and sustainable and renewable technology industries. The Company’s investment objective is to maximize its portfolio total return by generating current income from its debt investments and capital appreciation from its warrant and equity-related investments. The Company’s primary business objectives are to increase its net income, net operating income and net asset value (NAV) by investing in structured debt with warrants and equity of venture capital-backed companies in technology-related industries with attractive current yields and the potential for equity appreciation and realized gains. The Company focuses its investments in companies active in the technology industry sub-sectors.
Gladstone Investment Company Profile
Gladstone Investment Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objectives 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 provide its stockholders with long-term capital appreciation in the value of its assets by investing in equity securities, generally in combination with the aforementioned debt securities, of businesses that it believes can grow over time to permit it to sell its equity investments for capital gains. It has investments in sectors, such as chemicals, plastics, and rubber, and home and office furnishings, house wares, and durable consumer products, among others. Its investment advisor is Gladstone Management Corporation.
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