Gladstone Investment (NASDAQ:GAIN) & Fairfax Financial (NASDAQ:FFXDF) Critical Contrast

Gladstone Investment (NASDAQ:GAIN) and Fairfax Financial (OTCMKTS:FFXDF) are both small-cap finance companies, but which is the better stock? We will contrast the two companies based on the strength of their valuation, institutional ownership, risk, earnings, analyst recommendations, dividends and profitability.

Valuation & Earnings

This table compares Gladstone Investment and Fairfax Financial’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
Gladstone Investment $61.92 million 5.35 -$7.23 million $0.90 11.10
Fairfax Financial $712.69 million 1.79 $516.34 million N/A N/A

Fairfax Financial has higher revenue and earnings than Gladstone Investment.

Profitability

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

Net Margins Return on Equity Return on Assets
Gladstone Investment -11.68% 7.03% 4.62%
Fairfax Financial N/A 0.95% 0.73%

Insider and Institutional Ownership

16.0% of Gladstone Investment shares are held by institutional investors. Comparatively, 0.2% of Fairfax Financial shares are held by institutional investors. 2.6% of Gladstone Investment 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.

Volatility & Risk

Gladstone Investment has a beta of 1.48, indicating that its share price is 48% more volatile than the S&P 500. Comparatively, Fairfax Financial has a beta of 1.28, indicating that its share price is 28% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings for Gladstone Investment and Fairfax Financial, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gladstone Investment 0 2 0 0 2.00
Fairfax Financial 0 0 1 0 3.00

Gladstone Investment currently has a consensus price target of $12.75, indicating a potential upside of 27.63%. Given Gladstone Investment’s higher probable upside, analysts plainly believe Gladstone Investment is more favorable than Fairfax Financial.

Summary

Gladstone Investment beats Fairfax Financial on 7 of the 13 factors compared between the two stocks.

Gladstone Investment Company Profile

Gladstone Investment Corporation is a private equity fund specializing in lower middle market, acquisitions, mature stage, buyouts; recapitalizations; 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 seek to invest in manufacturing, consumer products and business services/ distribution 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 sales between $20 million and $100 million. The fund invest 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 its investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.

Fairfax Financial Company Profile

Fairfax India Holdings Corporation, an investment holding company, engages in the investment activities in India. It invests in public and private equity securities and debt instruments in India and Indian businesses, or other businesses with customers, suppliers, or business primarily conducted in, or dependent on, India. The company was founded in 2014 and is headquartered in Toronto, Canada. Fairfax India Holdings Corporation is a subsidiary of Fairfax Financial Holdings Limited.

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