Critical Survey: Gladstone Investment Corporation (GAIN) versus MFS Charter Income Trust (MCR)

Gladstone Investment Corporation (NASDAQ: GAIN) and MFS Charter Income Trust (NYSE:MCR) are both finance companies, but which is the better stock? We will contrast the two companies based on the strength of their institutional ownership, analyst recommendations, valuation, profitability, earnings, dividends and risk.

Institutional and Insider Ownership

18.1% of Gladstone Investment Corporation shares are owned by institutional investors. 2.4% of Gladstone Investment Corporation shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Valuation and Earnings

This table compares Gladstone Investment Corporation and MFS Charter Income Trust’s top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Gladstone Investment Corporation N/A N/A N/A $0.93 9.92
MFS Charter Income Trust N/A N/A N/A N/A N/A

Profitability

This table compares Gladstone Investment Corporation and MFS Charter Income Trust’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Gladstone Investment Corporation 55.52% 6.95% 4.21%
MFS Charter Income Trust N/A N/A N/A

Analyst Ratings

This is a breakdown of recent recommendations and price targets for Gladstone Investment Corporation and MFS Charter Income Trust, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Gladstone Investment Corporation 0 1 1 0 2.50
MFS Charter Income Trust 0 0 0 0 N/A

Gladstone Investment Corporation currently has a consensus target price of $9.50, indicating a potential upside of 2.93%. Given Gladstone Investment Corporation’s higher possible upside, research analysts plainly believe Gladstone Investment Corporation is more favorable than MFS Charter Income Trust.

Dividends

Gladstone Investment Corporation pays an annual dividend of $0.77 per share and has a dividend yield of 8.3%. MFS Charter Income Trust does not pay a dividend. Gladstone Investment Corporation pays out 82.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Summary

Gladstone Investment Corporation beats MFS Charter Income Trust on 8 of the 9 factors compared between the two stocks.

Gladstone Investment Corporation Company Profile

Gladstone Investment Corporation is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objectives are to achieve and grow current income by investing in debt securities of established businesses that it believes will provide stable earnings and cash flow to pay expenses, make principal and interest payments on its outstanding indebtedness and make distributions to stockholders that grow over time, and provide its stockholders with long-term capital appreciation in the value of its assets by investing in equity securities, generally in combination with the aforementioned debt securities, of businesses that it believes can grow over time to permit it to sell its equity investments for capital gains. It has investments in sectors, such as chemicals, plastics, and rubber, and home and office furnishings, house wares, and durable consumer products, among others. Its investment advisor is Gladstone Management Corporation.

MFS Charter Income Trust Company Profile

MFS Charter Income Trust (Fund) is a diversified closed-end management investment company. The Fund’s investment objective is to seek high current income, but may also consider capital appreciation. The Fund normally invests in debt instruments. The Fund also invests in corporate bonds of the United States and/or foreign issuers, the United States Government securities, foreign government securities, mortgage-backed and other asset-backed securities and/or debt instruments of issuers located in emerging market countries. The Fund’s portfolio comprises bonds, floating rate loans, equities, cash and cash equivalent and other. It invests in a range of Fixed income sectors, such as high yield corporates non-united states government bonds, investment grade corporates, emerging markets bonds, commercial mortgage-backed securities, asset-backed securities and collateralized debt obligations. Massachusetts Financial Services Company is the Fund’s investment advisor.

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