Head to Head Contrast: Gladstone Investment (NASDAQ:GAIN) and U.S. Global Investors (NASDAQ:GROW)

Gladstone Investment (NASDAQ:GAIN) and U.S. Global Investors (NASDAQ:GROW) are both small-cap finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, institutional ownership, earnings, dividends, analyst recommendations, valuation and profitability.

Risk & Volatility

Gladstone Investment has a beta of 0.76, suggesting that its stock price is 24% less volatile than the S&P 500. Comparatively, U.S. Global Investors has a beta of 0.67, suggesting that its stock price is 33% less volatile than the S&P 500.

Insider & Institutional Ownership

11.9% of Gladstone Investment shares are owned by institutional investors. Comparatively, 23.6% of U.S. Global Investors shares are owned by institutional investors. 2.2% of Gladstone Investment shares are owned by company insiders. Comparatively, 19.2% of U.S. Global Investors shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company will outperform the market over the long term.

Dividends

Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 6.3%. U.S. Global Investors pays an annual dividend of $0.09 per share and has a dividend yield of 3.3%. Gladstone Investment pays out 23.0% of its earnings in the form of a dividend. U.S. Global Investors pays out 36.0% 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 Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Gladstone Investment and U.S. Global Investors’ 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%
U.S. Global Investors	29.81%	6.70%	6.30%

Valuation and Earnings

This table compares Gladstone Investment and U.S. Global Investors”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Investment	$158.12 million	3.86	$184.75 million	$4.18	3.67
U.S. Global Investors	$10.25 million	3.26	$3.06 million	$0.25	10.88

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

Analyst Ratings

This is a summary of current ratings and price targets for Gladstone Investment and U.S. Global Investors, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Investment	0	1	3	0	2.75
U.S. Global Investors	0	1	0	0	2.00

Gladstone Investment presently has a consensus price target of $16.75, indicating a potential upside of 9.33%. Given Gladstone Investment’s stronger consensus rating and higher probable upside, analysts plainly believe Gladstone Investment is more favorable than U.S. Global Investors.

Summary

Gladstone Investment beats U.S. Global Investors on 11 of the 16 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 U.S. Global Investors

U.S. Global Investors, Inc. is a publicly owned investment manager. It primarily provides its services to investment companies. The firm is a large advisory firm, an investment adviser to an investment company which provides portfolio management for investment companies. The firm manages and launches equity/balanced funds, fixed income funds and other funds. It also manages hedge funds. The firm primarily invests in no-load mutual funds and exchange traded funds (ETFs). U.S. Global Investors, Inc. is based in San Antonio, Texas.