Gladstone Capital (NASDAQ:GLAD – Get Free Report) and Great Elm Group (NASDAQ:GEG – Get Free Report) are both small-cap finance companies, but which is the better stock? We will compare the two companies based on the strength of their earnings, risk, valuation, profitability, institutional ownership, dividends and analyst recommendations.
Valuation and Earnings
This table compares Gladstone Capital and Great Elm Group”s top-line revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Gladstone Capital | $53.19 million | 8.31 | $58.11 million | $2.06 | 9.50 |
| Great Elm Group | $20.33 million | 3.29 | -$35.44 million | ($1.05) | -2.06 |
Gladstone Capital has higher revenue and earnings than Great Elm Group. Great Elm Group is trading at a lower price-to-earnings ratio than Gladstone Capital, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Gladstone Capital and Great Elm Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Gladstone Capital | 50.48% | 9.67% | 5.00% |
| Great Elm Group | -160.19% | -73.59% | -27.65% |
Analyst Ratings
This is a summary of recent ratings and recommmendations for Gladstone Capital and Great Elm Group, as reported by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Gladstone Capital | 0 | 3 | 3 | 0 | 2.50 |
| Great Elm Group | 1 | 0 | 0 | 0 | 1.00 |
Gladstone Capital currently has a consensus target price of $21.67, suggesting a potential upside of 10.74%. Given Gladstone Capital’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Gladstone Capital is more favorable than Great Elm Group.
Insider and Institutional Ownership
10.7% of Gladstone Capital shares are owned by institutional investors. Comparatively, 52.8% of Great Elm Group shares are owned by institutional investors. 3.8% of Gladstone Capital shares are owned by insiders. Comparatively, 49.7% of Great Elm Group shares are owned by insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Volatility and Risk
Gladstone Capital has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, Great Elm Group has a beta of 0.64, indicating that its stock price is 36% less volatile than the S&P 500.
Summary
Gladstone Capital beats Great Elm Group on 12 of the 14 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 Great Elm Group
Great Elm Group, Inc. operates as a asset management company. The company engages in credit, real estate, and finance businesses. It is also involved in business development related activities and offers investment management services. The company was formerly known as Great Elm Capital Group, Inc. and changed its name to Great Elm Group, Inc. in December 2020. Great Elm Group, Inc. was incorporated in 1994 and is headquartered in Waltham, Massachusetts.
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