Comparing Nuveen Churchill Direct Lending (NYSE:NCDL) and Gladstone Capital (NASDAQ:GLAD)

Gladstone Capital (NASDAQ:GLAD) and Nuveen Churchill Direct Lending (NYSE:NCDL) are both small-cap finance companies, but which is the superior stock? We will contrast the two businesses based on the strength of their institutional ownership, valuation, analyst recommendations, dividends, earnings, risk and profitability.

Insider & Institutional Ownership

10.7% of Gladstone Capital shares are owned by institutional investors. 4.0% of Gladstone Capital shares are owned by company insiders. Comparatively, 0.6% of Nuveen Churchill Direct Lending shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock is poised for long-term growth.

Profitability

This table compares Gladstone Capital and Nuveen Churchill Direct Lending’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Capital	84.60%	9.43%	5.64%
Nuveen Churchill Direct Lending	43.35%	11.88%	5.25%

Earnings and Valuation

This table compares Gladstone Capital and Nuveen Churchill Direct Lending”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Capital	$96.62 million	4.99	$94.72 million	$3.39	6.37
Nuveen Churchill Direct Lending	$224.04 million	3.03	$116.32 million	$1.82	7.54

Nuveen Churchill Direct Lending has higher revenue and earnings than Gladstone Capital. Gladstone Capital is trading at a lower price-to-earnings ratio than Nuveen Churchill Direct Lending, indicating that it is currently the more affordable of the two stocks.

Volatility and Risk

Gladstone Capital has a beta of 0.99, indicating that its share price is 1% less volatile than the S&P 500. Comparatively, Nuveen Churchill Direct Lending has a beta of 0.37, indicating that its share price is 63% less volatile than the S&P 500.

Dividends

Gladstone Capital pays an annual dividend of $1.98 per share and has a dividend yield of 9.2%. Nuveen Churchill Direct Lending pays an annual dividend of $1.80 per share and has a dividend yield of 13.1%. Gladstone Capital pays out 58.4% of its earnings in the form of a dividend. Nuveen Churchill Direct Lending pays out 98.9% 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 has increased its dividend for 4 consecutive years.

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Gladstone Capital and Nuveen Churchill Direct Lending, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Capital	0	3	0	0	2.00
Nuveen Churchill Direct Lending	0	3	1	0	2.25

Gladstone Capital currently has a consensus target price of $24.50, suggesting a potential upside of 13.48%. Nuveen Churchill Direct Lending has a consensus target price of $16.63, suggesting a potential upside of 21.12%. Given Nuveen Churchill Direct Lending’s stronger consensus rating and higher probable upside, analysts plainly believe Nuveen Churchill Direct Lending is more favorable than Gladstone Capital.

Summary

Gladstone Capital beats Nuveen Churchill Direct Lending on 9 of the 17 factors compared between the two stocks.

About Gladstone Capital

Gladstone Capital Corporation is a business development company specializing in lower middle market, growth capital, add on acquisitions, change of control, buy & build strategies, debt refinancing, debt investments in senior term loans, revolving loans, secured first and second lien term loans, senior subordinated loans, unitranche loans, junior subordinated loans, and mezzanine loans and equity investments in the form of common stock, preferred stock, limited liability company interests, or warrants. It operates as a business development company. The fund also makes private equity investments in acquisitions, buyouts and recapitalizations, and refinancing existing debts. It targets small and medium-sized companies in United States. It is industry agnostic and seeks to invest in companies engaged in the business services, light and specialty manufacturing, niche industrial products and services, specialty consumer products and services, energy services, transportation and logistics, healthcare and education services, specialty chemicals, media and communications and aerospace and defense. The fund seeks to invest between $7 million and $30 million in companies that have between $20 million and $150 million in sales and EBITDA between $3 million and $25 million. It prefers to acquire minority stakes. It seeks to exit its investments through strategic acquisitions by other industry participants or financial buyers, initial public offerings of common stock, or other capital market transactions.

About Nuveen Churchill Direct Lending

Nuveen Churchill Direct Lending Corp. is a specialty finance company focused primarily on investing in senior secured loans to private equity-owned U.S. middle market companies. It has elected to be regulated as a business development company. Nuveen Churchill Direct Lending Corp. is based in NEW YORK.