Gladstone Investment (NASDAQ:GAIN) & Amalgamated Financial (NASDAQ:AMAL) Critical Review

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

Profitability

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

	Net Margins	Return on Equity	Return on Assets
Amalgamated Financial	22.97%	14.75%	1.30%
Gladstone Investment	83.78%	7.33%	3.53%

Institutional & Insider Ownership

75.9% of Amalgamated Financial shares are held by institutional investors. Comparatively, 11.9% of Gladstone Investment shares are held by institutional investors. 1.3% of Amalgamated Financial shares are held by insiders. Comparatively, 2.4% of Gladstone Investment shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Dividends

Amalgamated Financial pays an annual dividend of $0.56 per share and has a dividend yield of 1.9%. Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 7.0%. Amalgamated Financial pays out 16.9% of its earnings in the form of a dividend. Gladstone Investment pays out 38.4% 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. Amalgamated Financial has raised its dividend for 4 consecutive years.

Valuation & Earnings

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Amalgamated Financial	$434.51 million	1.99	$106.43 million	$3.32	8.68
Gladstone Investment	$85.11 million	6.38	$65.32 million	$2.50	5.48

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

Risk & Volatility

Amalgamated Financial has a beta of 0.88, suggesting that its share price is 12% less volatile than the S&P 500. Comparatively, Gladstone Investment has a beta of 0.91, suggesting that its share price is 9% less volatile than the S&P 500.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Amalgamated Financial	0	2	1	0	2.33
Gladstone Investment	0	4	1	0	2.20

Amalgamated Financial currently has a consensus target price of $33.50, indicating a potential upside of 16.28%. Given Amalgamated Financial’s stronger consensus rating and higher possible upside, equities research analysts plainly believe Amalgamated Financial is more favorable than Gladstone Investment.

Summary

Amalgamated Financial beats Gladstone Investment on 10 of the 16 factors compared between the two stocks.

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.

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.