Comparing Tekla Life Sciences Investors (NYSE:HQL) & Gladstone Capital (NASDAQ:GLAD)

Gladstone Capital (NASDAQ:GLADGet Rating) and Tekla Life Sciences Investors (NYSE:HQLGet Rating) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their earnings, risk, dividends, valuation, institutional ownership, profitability and analyst recommendations.

Insider and Institutional Ownership

10.4% of Gladstone Capital shares are held by institutional investors. Comparatively, 20.7% of Tekla Life Sciences Investors shares are held by institutional investors. 5.2% of Gladstone Capital shares are held by insiders. Comparatively, 10.1% of Tekla Life Sciences Investors shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Analyst Ratings

This is a summary of current ratings and target prices for Gladstone Capital and Tekla Life Sciences Investors, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gladstone Capital 0 2 0 0 2.00
Tekla Life Sciences Investors 0 0 0 0 N/A

Gladstone Capital currently has a consensus price target of $10.00, suggesting a potential downside of 11.58%. Given Gladstone Capital’s higher probable upside, equities analysts plainly believe Gladstone Capital is more favorable than Tekla Life Sciences Investors.

Valuation and Earnings

This table compares Gladstone Capital and Tekla Life Sciences Investors’ revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gladstone Capital $53.79 million 7.21 $84.30 million $2.10 5.39
Tekla Life Sciences Investors N/A N/A N/A N/A N/A

Gladstone Capital has higher revenue and earnings than Tekla Life Sciences Investors.

Profitability

This table compares Gladstone Capital and Tekla Life Sciences Investors’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gladstone Capital 115.70% 9.93% 5.65%
Tekla Life Sciences Investors N/A N/A N/A

Volatility and Risk

Gladstone Capital has a beta of 1.29, meaning that its stock price is 29% more volatile than the S&P 500. Comparatively, Tekla Life Sciences Investors has a beta of 0.88, meaning that its stock price is 12% less volatile than the S&P 500.

Dividends

Gladstone Capital pays an annual dividend of $0.81 per share and has a dividend yield of 7.2%. Tekla Life Sciences Investors pays an annual dividend of $1.65 per share and has a dividend yield of 11.4%. Gladstone Capital pays out 38.6% of its earnings in the form of a dividend. Gladstone Capital has raised its dividend for 1 consecutive years.

Summary

Gladstone Capital beats Tekla Life Sciences Investors on 7 of the 11 factors compared between the two stocks.

Gladstone Capital Company Profile (Get Rating)

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.

Tekla Life Sciences Investors Company Profile (Get Rating)

Tekla Life Sciences Investors is a closed-ended equity mutual fund launched and managed by Tekla Capital Management LLC. The fund invests in public equity markets across the globe. It seeks to invest in stocks of companies operating in the life sciences sector, including the biotechnology, pharmaceutical, diagnostics, managed healthcare, medical equipment, hospitals, healthcare information technology and services, devices and supplies industries, and in agriculture and environmental management industries. The fund primarily invests in growth stocks of small cap companies. It employs fundamental analysis with a focus on factors such as market position for services or products, experience of business management, technological expertise, and the ability either to generate funds internally to finance growth or to secure outside sources of capital to create its portfolio. The fund benchmarks the performance of its portfolio against the NASDAQ Biotech Index and the S&P 500 Index. It was formerly known as H&Q Life Sciences Investors fund. Tekla Life Sciences Investors was formed on February 20, 1992 and is domiciled in the United States.

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