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1. Company Snapshot

1.a. Company Description

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.

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1.b. Last Insights on GAIN

Gladstone Investment Corporation's recent performance was positively driven by its robust credit metrics and stable portfolio growth. The company's strategic succession plan, announced on March 23, 2026, brought new leadership, ensuring continuity and stability. Additionally, its baby bonds, offering yields to worst of around 8.4-7.2%, remain attractive to income-focused investors. The company's asset coverage ratio, projected between 189% and 201%, remains robust, well above the regulatory minimum. Its recent notes offering and listing on the Nasdaq Global Select Market under the trading symbol "GAING" further diversify its funding profile.

1.c. Company Highlights

2. Gladstone Investment's Q3 Earnings: A Strong Performance Amidst a Challenging Environment

Gladstone Investment reported a robust financial performance in the third quarter of fiscal year 2026, with an adjusted Net Investment Income (NII) of $0.21 per share, slightly below the estimated $0.234 per share. The company's total investment income decreased by $0.2 million, primarily due to a decrease in dividend and success fee income. Despite this, the weighted average principal balance of interest-bearing investments increased by $30 million. The company's net asset value (NAV) per share increased to $14.95, up from $13.53 in the prior quarter, driven by $1.77 per share of net unrealized appreciation and $0.09 per share of net realized gains.

Publication Date: Mar -09

📋 Highlights
  • Adjusted NII and Assets:: Generated $0.21/share adjusted NII, $1.2B total assets, and 29 operating companies in Q3 2026.
  • Investment Income Decline:: Total investment income fell by $0.2M, driven by lower dividend/success fee income, despite $30M increase in interest-bearing investments.
  • NAV Growth:: NAV rose to $14.95/share (+10.5%) from $13.53/share, fueled by $1.77/share net unrealized appreciation and $0.09/share realized gains.
  • Non-Accrual Portfolio:: Non-accrual investments at 3.8% (cost) and 1.5% (fair value) of total portfolio, reflecting improved risk management.
  • Distributable Income:: Ended Q3 with $108.7M distributable income ($2.73/share), leveraging $1.77/share net unrealized appreciation.

Portfolio Performance and Risk Profile

The company's portfolio continues to demonstrate resilience, with 29 operating companies and total assets of approximately $1.2 billion. The non-accrual investments represent 3.8% of the total book portfolio at cost and 1.5% at fair value. Taylor Ritchie, CFO, emphasized that the company's interest rate floors, set at 13% to 13.5%, protect the yield against future rate declines. The company's risk profile is managed through a combination of debt and equity investments, with about half the portfolio having a floor of 12.1% due to interest rate spreads.

Balance Sheet and Liquidity

Gladstone Investment ended the quarter with sufficient liquidity and financial flexibility to support growing the portfolio. The company redeemed the full $74.8 million outstanding balance of its 8% notes using proceeds from the recently issued 6.875% notes and borrowings under its line of credit. This move demonstrates the company's ability to manage its debt and optimize its capital structure.

Valuation and Growth Prospects

With a P/E Ratio of 4.11 and a Dividend Yield of 11.11%, Gladstone Investment's valuation appears attractive. Analysts estimate next year's revenue growth at 7.3%, indicating a positive outlook for the company's future performance. The company's ROE of 24.7% and ROIC of 4.98% suggest a strong ability to generate returns on equity and invested capital. As David Dullum noted, the firm's model of combining debt and equity gives it a slight advantage in valuations, and the company is seeing good deals in business services and manufacturing.

Investment Strategy and Outlook

Gladstone Investment's investment strategy remains focused on underwriting new debt investments with elevated interest rate floors to mitigate potential declines in SOFR. The company's pipeline is similar to last year, with some areas showing improvement. David Dullum emphasized that supplemental distributions will remain an important component of the company's overall shareholder return strategy, indicating a commitment to returning value to shareholders.

3. NewsRoom

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Gladstone Investment: Monthly Pay With Strong Results

Apr -15

Source: seekingalpha.com

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Financial Survey: Saratoga Investment (NYSE:SAR) versus Gladstone Investment (NASDAQ:GAIN)

Apr -15

Source: defenseworld.net

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Gladstone Investment Announces Monthly Cash Distributions for April, May and June 2026, and Earnings Release and Conference Call Dates for the Fourth Fiscal Quarter

Apr -14

Source: accessnewswire.com

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Want $6,650 in Passive Income? Invest $75,000 ($25,000 Each) Into These 3 High-Yield Dividend Stocks

Apr -14

Source: 247wallst.com

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Reviewing Gladstone Investment (NASDAQ:GAIN) and Saratoga Investment (NYSE:SAR)

Apr -10

Source: defenseworld.net

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Gladstone Investment (NASDAQ:GAIN) Stock Price Passes Above Two Hundred Day Moving Average – What’s Next?

Apr -08

Source: defenseworld.net

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20 BDCs And 13 Of Them Are Likely To Slash Their Dividends This Year

Apr -06

Source: seekingalpha.com

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Gladstone Investment (NASDAQ:GAIN) Stock Price Crosses Above 200 Day Moving Average – What’s Next?

Mar -31

Source: defenseworld.net

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (8.00%)

6. Segments

Investment and Related Activities

Expected Growth: 8.0%

Gladstone Investment Corporation's 8.0% growth in Investment and Related Activities is driven by increasing demand for debt financing from small and medium-sized businesses, expansion into new industries, and a strong pipeline of investment opportunities. Additionally, the company's focus on diversifying its investment portfolio and improving operational efficiency have contributed to its growth.

7. Detailed Products

Debt Securities

Gladstone Investment Corporation provides debt financing to small and medium-sized businesses, offering a range of debt securities such as senior loans, subordinated debt, and mezzanine debt.

Equity Investments

Gladstone Investment Corporation makes equity investments in small and medium-sized businesses, providing capital for growth, acquisitions, and recapitalizations.

Structured Equity

Gladstone Investment Corporation offers structured equity solutions, combining debt and equity features to provide flexible financing options for businesses.

Second Lien Debt

Gladstone Investment Corporation provides second lien debt financing to businesses, offering a subordinated debt solution with a lower priority claim on assets.

Unitranche Debt

Gladstone Investment Corporation offers unitranche debt financing, combining senior and subordinated debt into a single financing solution.

8. Gladstone Investment Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Gladstone Investment Corporation operates in a niche industry, and there are limited substitutes for its investment services. However, the company faces competition from other investment firms and financial institutions.

Bargaining Power Of Customers

Gladstone Investment Corporation's customers are primarily institutional investors and high net worth individuals, who have limited bargaining power due to the company's specialized investment services.

Bargaining Power Of Suppliers

Gladstone Investment Corporation's suppliers are primarily investment banks, law firms, and other financial institutions, which have limited bargaining power due to the company's strong reputation and negotiating power.

Threat Of New Entrants

The investment industry has high barriers to entry, including regulatory requirements and capital requirements, which limits the threat of new entrants. Additionally, Gladstone Investment Corporation's established reputation and network effects make it difficult for new entrants to compete.

Intensity Of Rivalry

The investment industry is highly competitive, with many established players competing for market share. Gladstone Investment Corporation faces intense competition from other investment firms, private equity firms, and hedge funds.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 59.69%
Debt Cost 10.52%
Equity Weight 40.31%
Equity Cost 10.52%
WACC 10.52%
Leverage 148.10%

11. Quality Control: Gladstone Investment Corporation passed 5 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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ArrowMark Financial

A-Score: 7.9/10

Value: 5.8

Growth: 6.3

Quality: 8.1

Yield: 10.0

Momentum: 7.0

Volatility: 10.0

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Gladstone Investment

A-Score: 7.7/10

Value: 6.8

Growth: 5.9

Quality: 7.6

Yield: 10.0

Momentum: 6.0

Volatility: 10.0

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Growth: 6.3

Quality: 7.4

Yield: 10.0

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Great Elm Capital

A-Score: 6.2/10

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Quality: 3.3

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A-Score: 5.5/10

Value: 5.7

Growth: 2.7

Quality: 6.3

Yield: 10.0

Momentum: 0.5

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

15.44$

Current Price

15.44$

Potential

-0.00%

Expected Cash-Flows