Head to Head Contrast: Gladstone Capital (NASDAQ:GLAD) vs. Amalgamated Financial (NASDAQ:AMAL)

Gladstone Capital (NASDAQ:GLAD) and Amalgamated Financial (NASDAQ:AMAL) are both small-cap finance companies, but which is the superior investment? We will compare the two businesses based on the strength of their profitability, institutional ownership, dividends, risk, analyst recommendations, earnings and valuation.

Insider and Institutional Ownership

10.7% of Gladstone Capital shares are held by institutional investors. Comparatively, 75.9% of Amalgamated Financial shares are held by institutional investors. 3.8% of Gladstone Capital shares are held by company insiders. Comparatively, 1.6% of Amalgamated Financial shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company will outperform the market over the long term.

Earnings & Valuation

This table compares Gladstone Capital and Amalgamated Financial”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Capital	$89.12 million	4.87	$58.11 million	$1.83	10.50
Amalgamated Financial	$453.17 million	2.62	$104.45 million	$3.44	11.53

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

Volatility & Risk

Gladstone Capital has a beta of 0.92, suggesting that its stock price is 8% less volatile than the S&P 500. Comparatively, Amalgamated Financial has a beta of 0.81, suggesting that its stock price is 19% 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 9.4%. Amalgamated Financial pays an annual dividend of $0.68 per share and has a dividend yield of 1.7%. Gladstone Capital pays out 98.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Amalgamated Financial pays out 19.8% of its earnings in the form of a dividend. Gladstone Capital has increased its dividend for 4 consecutive years and Amalgamated Financial has increased its dividend for 4 consecutive years.

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Gladstone Capital	45.15%	9.79%	5.31%
Amalgamated Financial	22.33%	13.89%	1.23%

Analyst Recommendations

This is a summary of current ratings and price targets for Gladstone Capital and Amalgamated Financial, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Capital	0	4	2	0	2.33
Amalgamated Financial	1	1	1	0	2.00

Gladstone Capital currently has a consensus price target of $21.67, indicating a potential upside of 12.79%. Amalgamated Financial has a consensus price target of $44.00, indicating a potential upside of 10.89%. Given Gladstone Capital’s stronger consensus rating and higher possible upside, equities analysts clearly believe Gladstone Capital is more favorable than Amalgamated Financial.

Summary

Gladstone Capital beats Amalgamated Financial on 9 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 Amalgamated Financial

Amalgamated Financial Corp. operates as the bank holding company for Amalgamated Bank that provides commercial and retail banking, investment management, and trust and custody services for commercial and retail customers in the United States. The company accepts various deposit products, including non-interest bearing accounts, interest-bearing demand products, savings accounts, money market accounts, NOW accounts, and certificates of deposit. It also provides various commercial loans comprising commercial and industrial, multifamily mortgage, and commercial real estate loans; residential mortgage loans; and retail loans, such as residential real estate, consumer solar, and consumer and other loans. In addition, the company offers online banking, bill payment, online cash management, and safe deposit box rental services; debit and ATM cards; and trust, custody, and investment management services comprising asset safekeeping, corporate actions, income collections, proxy, account transition, asset transfers, and conversion management services. Further, it provides investment products, such as funds spanning equity, fixed-income, real estate, and alternative investment products; and brokerage, asset management, and insurance products. Amalgamated Financial Corp. was founded in 1923 and is headquartered in New York, New York.