Gladstone Capital (NASDAQ:GLAD) & Main Street Capital (NYSE:MAIN) Head-To-Head Comparison

Gladstone Capital (NASDAQ:GLAD) and Main Street Capital (NYSE:MAIN) are both finance companies, but which is the better investment? We will contrast the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, risk, valuation, earnings and dividends.

Risk and Volatility

Gladstone Capital has a beta of 0.99, suggesting that its stock price is 1% less volatile than the S&P 500. Comparatively, Main Street Capital has a beta of 0.87, suggesting that its stock price is 13% less volatile than the S&P 500.

Dividends

Gladstone Capital pays an annual dividend of $1.80 per share and has a dividend yield of 9.3%. Main Street Capital pays an annual dividend of $3.06 per share and has a dividend yield of 5.3%. Gladstone Capital pays out 53.1% of its earnings in the form of a dividend. Main Street Capital pays out 50.4% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Gladstone Capital has raised its dividend for 4 consecutive years and Main Street Capital has raised its dividend for 4 consecutive years.

Profitability

This table compares Gladstone Capital and Main Street Capital’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%
Main Street Capital	96.16%	12.70%	6.85%

Institutional & Insider Ownership

10.7% of Gladstone Capital shares are held by institutional investors. Comparatively, 20.3% of Main Street Capital shares are held by institutional investors. 4.0% of Gladstone Capital shares are held by company insiders. Comparatively, 4.0% of Main Street Capital shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings and Valuation

This table compares Gladstone Capital and Main Street Capital”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Capital	$76.10 million	5.68	$94.72 million	$3.39	5.71
Main Street Capital	$623.14 million	8.22	$508.08 million	$6.07	9.44

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

Analyst Ratings

This is a breakdown of current ratings and recommmendations for Gladstone Capital and Main Street Capital, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Capital	1	4	0	0	1.80
Main Street Capital	0	5	2	0	2.29

Gladstone Capital presently has a consensus target price of $26.00, indicating a potential upside of 34.37%. Main Street Capital has a consensus target price of $60.40, indicating a potential upside of 5.41%. Given Gladstone Capital’s higher probable upside, analysts clearly believe Gladstone Capital is more favorable than Main Street Capital.

Summary

Main Street Capital beats Gladstone Capital on 13 of the 16 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 Main Street Capital

Main Street Capital Corporation is a business development company specializes in equity capital to lower middle market companies. The firm specializing in recapitalizations, management buyouts, refinancing, family estate planning, management buyouts, refinancing, industry consolidation, mature, later stage emerging growth. The firm also provides debt capital to middle market companies for acquisitions, management buyouts, growth financings, recapitalizations, and refinancing. The firm seeks to partner with entrepreneurs, business owners and management teams and generally provides “one stop” financing alternatives within its lower middle market portfolio. It prefers to invest in air freight and logistics, auto components, building products, chemicals, commercial services, computers, construction and engineering, consumer finance, consumer services, electronic equipment, energy equipment and services, financial services, health care equipment, health care providers, hotels, restaurants, and leisure, internet software and services, IT Services, machinery, oil, gas and consumable fuels, paper and forest products, professional and industrial services, road and rail, software, specialty retail, telecommunication, consumer discretionary, energy, materials, technology, and transportation. The firm typically invests in lower middle market companies generally with annual revenues between $10 million and $150 million. It prefers to invest in ranging between $5 million and $100 million in equity investment and enterprise value in ranging between $3 million and $20 million. The firm typically prefers to invest in the range of $5 million and $150 million per transaction in debt investment value and in the range of $3 million and $75 million in annual EBITDA in between $3 million and $25 million in lower middle market $5 million and $75 million in credit solution. The firm’s middle market debt investments are made in businesses that are generally larger in size than its lower middle market portfolio companies. It takes 5 percent minority and up to 50 percent majority equity investments. Main Street Capital Corporation was founded in 2007 and is based in Houston, Texas with an additional office in Chojnów, Poland.