Reviewing Gladstone Investment (NASDAQ:GAIN) and Virtu Financial (NYSE:VIRT)

Gladstone Investment (NASDAQ:GAIN) and Virtu Financial (NYSE:VIRT) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their institutional ownership, valuation, dividends, analyst recommendations, risk, profitability and earnings.

Dividends

Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 6.1%. Virtu Financial pays an annual dividend of $0.96 per share and has a dividend yield of 1.7%. Gladstone Investment pays out 23.0% of its earnings in the form of a dividend. Virtu Financial pays out 15.9% 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.

Analyst Recommendations

This is a summary of recent ratings and target prices for Gladstone Investment and Virtu Financial, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Investment	0	0	3	1	3.25
Virtu Financial	1	2	3	1	2.57

Gladstone Investment presently has a consensus target price of $16.75, suggesting a potential upside of 5.61%. Virtu Financial has a consensus target price of $58.80, suggesting a potential upside of 1.61%. Given Gladstone Investment’s stronger consensus rating and higher probable upside, equities research analysts clearly believe Gladstone Investment is more favorable than Virtu Financial.

Insider and Institutional Ownership

11.8% of Gladstone Investment shares are held by institutional investors. Comparatively, 45.8% of Virtu Financial shares are held by institutional investors. 2.2% of Gladstone Investment shares are held by insiders. Comparatively, 46.8% of Virtu Financial 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.

Risk & Volatility

Gladstone Investment has a beta of 0.77, meaning that its share price is 23% less volatile than the S&P 500. Comparatively, Virtu Financial has a beta of 0.62, meaning that its share price is 38% less volatile than the S&P 500.

Valuation & Earnings

This table compares Gladstone Investment and Virtu Financial”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Investment	$99.08 million	6.37	$184.75 million	$4.18	3.79
Virtu Financial	$3.63 billion	2.47	$468.36 million	$6.02	9.61

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

Profitability

This table compares Gladstone Investment and Virtu Financial’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Investment	158.95%	5.90%	2.88%
Virtu Financial	13.50%	49.06%	4.28%

Summary

Virtu Financial beats Gladstone Investment on 9 of the 15 factors compared between the two stocks.

About Gladstone Investment

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.

About Virtu Financial

Virtu Financial, Inc., a financial services company, provides data, analytics, and connectivity products to clients worldwide. The company operates in two segments, Market Making and Execution Services. Its product suite includes offerings in execution, liquidity sourcing, analytics and broker-neutral, and multi-dealer platforms in workflow technology. The company’s solutions enable clients to trade on various venues across countries and in multiple asset classes, including global equities, ETFs, foreign exchange, futures, fixed income, cryptocurrencies, and other commodities. Its analytics platform provides a range of pre- and post-trade services, data products, and compliance tools for clients to invest, trade, and manage risk across markets. Virtu Financial, Inc. was founded in 2008 and is headquartered in New York, New York.