Updated Aug 8 at 4:57pm ET.
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The company earned $0.40 per share last quarter, which was significantly higher than the $0.22 analysts expected. Total investment income, which is the money it collects from interest on loans and dividends from its ownership stakes, rose about 13 percent to roughly $28.4 million. This growth shows the portfolio is generating more cash even as the company manages its costs.
However, the value of its investments fell on paper by about $18.8 million during the period. This is a common swing for a business development company, which is a firm that lends to and buys stakes in private businesses. While the quarterly profit beat is a good sign for the monthly dividend, the drop in investment value is a reminder that the health of its portfolio companies can be volatile.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
The firm provided more debt and equity to Global GRAB Technologies to fund its purchase of RSSI Barriers. Global GRAB provides security systems that stop hostile vehicles, and this deal adds more barrier products to its lineup. By helping its portfolio companies grow through acquisitions, the firm aims to increase the value of its ownership stakes and the interest it collects on loans.
The company declared its regular monthly distributions for the current quarter. These payouts are the primary way it returns cash to shareholders, funded by the interest and dividends it earns from its portfolio. For a business development company like this, consistent monthly payouts are a core part of why people own the stock.
The company completed a new platform acquisition of DHE Computer Systems. It provided a mix of loans and an ownership stake to close the deal. This is the core of the business model: finding mid-sized companies to invest in to grow the total pool of assets that generate monthly interest income for shareholders.
Analysts have recently raised their price expectations for the stock following a series of company acquisitions and positive earnings results. Only 2 of 7 analysts rate it a buy, and the average target of $17 is roughly fair.
The company has a habit of beating expectations, often by a wide margin as it did this quarter. This suggests management is conservative about what they promise and consistently finds ways to over-deliver.
| Expectation | |
|---|---|
| EPS | $0.22 |
| Revenue | $26M |
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