Chicago Atlantic BDC (NASDAQ:LIEN) & Gladstone Capital (NASDAQ:GLAD) Head to Head Review

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

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for Gladstone Capital and Chicago Atlantic BDC, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Capital	1	2	2	0	2.20
Chicago Atlantic BDC	0	3	0	0	2.00

Gladstone Capital currently has a consensus target price of $22.00, indicating a potential upside of 3.58%. Given Gladstone Capital’s stronger consensus rating and higher probable upside, equities analysts plainly believe Gladstone Capital is more favorable than Chicago Atlantic BDC.

Profitability

This table compares Gladstone Capital and Chicago Atlantic BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Capital	64.36%	9.48%	5.53%
Chicago Atlantic BDC	33.72%	5.80%	5.46%

Valuation and Earnings

This table compares Gladstone Capital and Chicago Atlantic BDC”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Capital	$89.12 million	5.38	$58.11 million	$2.56	8.30
Chicago Atlantic BDC	$21.67 million	11.26	$9.62 million	$0.79	13.53

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

Volatility & Risk

Gladstone Capital has a beta of 0.93, meaning that its share price is 7% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.26, meaning that its share price is 74% 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 8.5%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 12.7%. Gladstone Capital pays out 70.3% of its earnings in the form of a dividend. Chicago Atlantic BDC pays out 172.2% 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 raised its dividend for 4 consecutive years.

Insider and Institutional Ownership

10.7% of Gladstone Capital shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 4.0% of Gladstone Capital shares are held by insiders. Comparatively, 16.9% of Chicago Atlantic BDC shares are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a stock is poised for long-term growth.

Summary

Gladstone Capital beats Chicago Atlantic BDC on 13 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 Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.