Gladstone Capital Corp. / GLAD

About Gladstone Capital Corp.

1521 Westbranch Dr., Suite 200, McLean, Va. 22102
www.gladstonecapital.com | 703-287-5800 | Founded: 2001

Industry: Financial Services | Category: Public Companies

Gladstone Capital looks for profitable companies with strong management. A typical lending rate is 12 to 13 percent. Gladstone has invested in a range of companies, including box manufacturers, steel wool makers and luggage manufacturers. Business-development companies, like real estate investment trusts, are required to pay out at least 90 percent of their ordinary taxable income to shareholders, which accounts for their lush dividends. Gladstone is no exception. Its yield is more than 7 percent.
The good news: Assets increased in fiscal 2006 to $225.8 million, up from $205.8 at the end of fiscal 2005. Gladstone lent $136 million to 22 companies last year. Net investment income increased 12 percent, to $19.4 million, most of which pays the dividend. On the downside, 19 companies made early repayments of loans to Gladstone of $124 million. The company would prefer that the loans not be repaid early, so that Gladstone can collect more interest income over the life of the loan.
Sept. 30 marked the termination of Gladstone Capital's stock-option incentive plan in favor of a performance-based incentive fee program.
Wachovia analysts recently upgraded the stock, saying the company's weak share price has balanced out the risk. BB&T says Gladstone shares are fully valued. And Jefferies & Co. recently said the company "continues to struggle with portfolio growth." Jefferies added that Gladstone Capital's return on equity was respectable but that it did not see significant capital appreciation in its future.

2006 Financial Data

Revenues: $26,900,000 | Net Income: $19,351,000
Asssets: $225,783,000 | Earnings Per Share: $2.10
Stockholder Equity: $172,570,000 | Annual Dividend: $1.64
Total employees: None | Local employees: None