Gladstone Capital (NASDAQ:GLAD – Get Free Report) and T. Rowe Price Group (NASDAQ:TROW – Get Free Report) are both finance companies, but which is the superior stock? We will compare the two businesses based on the strength of their risk, earnings, analyst recommendations, institutional ownership, profitability, dividends and valuation.
Profitability
This table compares Gladstone Capital and T. Rowe Price Group’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Gladstone Capital | 50.48% | 9.67% | 5.00% |
| T. Rowe Price Group | 29.26% | 20.91% | 15.68% |
Institutional & Insider Ownership
10.7% of Gladstone Capital shares are owned by institutional investors. Comparatively, 73.4% of T. Rowe Price Group shares are owned by institutional investors. 3.8% of Gladstone Capital shares are owned by company insiders. Comparatively, 1.6% of T. Rowe Price Group shares are owned by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a company is poised for long-term growth.
Valuation & Earnings
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Gladstone Capital | $89.12 million | 4.85 | $58.11 million | $2.06 | 9.30 |
| T. Rowe Price Group | $7.59 billion | 2.94 | $2.09 billion | $9.97 | 10.49 |
T. Rowe Price Group has higher revenue and earnings than Gladstone Capital. Gladstone Capital is trading at a lower price-to-earnings ratio than T. Rowe Price Group, indicating that it is currently the more affordable of the two stocks.
Risk & Volatility
Gladstone Capital has a beta of 0.94, indicating that its stock price is 6% less volatile than the S&P 500. Comparatively, T. Rowe Price Group has a beta of 1.45, indicating that its stock price is 45% more 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%. T. Rowe Price Group pays an annual dividend of $5.20 per share and has a dividend yield of 5.0%. Gladstone Capital pays out 87.4% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. T. Rowe Price Group pays out 52.2% of its earnings in the form of a dividend. Gladstone Capital has raised its dividend for 4 consecutive years and T. Rowe Price Group has raised its dividend for 39 consecutive years.
Analyst Recommendations
This is a summary of recent recommendations for Gladstone Capital and T. Rowe Price Group, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Gladstone Capital | 0 | 3 | 2 | 0 | 2.40 |
| T. Rowe Price Group | 3 | 9 | 1 | 0 | 1.85 |
Gladstone Capital presently has a consensus target price of $21.67, indicating a potential upside of 13.14%. T. Rowe Price Group has a consensus target price of $105.92, indicating a potential upside of 1.25%. Given Gladstone Capital’s stronger consensus rating and higher probable upside, analysts clearly believe Gladstone Capital is more favorable than T. Rowe Price Group.
Summary
T. Rowe Price Group beats Gladstone Capital on 10 of the 17 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 T. Rowe Price Group
T. Rowe Price Group, Inc. is a publicly owned investment manager. The firm provides its services to individuals, institutional investors, retirement plans, financial intermediaries, and institutions. It launches and manages equity and fixed income mutual funds. The firm invests in the public equity and fixed income markets across the globe. It employs fundamental and quantitative analysis with a bottom-up approach. The firm utilizes in-house and external research to make its investments. It employs socially responsible investing with a focus on environmental, social, and governance issues. It makes investment in late-stage venture capital transactions and usually invests between $3 million and $5 million. The firm was previously known as T. Rowe Group, Inc. and T. Rowe Price Associates, Inc. T. Rowe Price Group, Inc. was founded in 1937 and is based in Baltimore, Maryland, with additional offices in Colorado Springs, Colorado; Owings Mills, Maryland; San Francisco, California; New York, New York; Philadelphia, Pennsylvania; Tampa, Florida; Toronto, Ontario; Hellerup, Denmark; Amsterdam, The Netherlands; Luxembourg, Grand Duchy of Luxembourg; Zurich, Switzerland; Dubai, United Arab Emirates; London, United Kingdom; Sydney, New South Wales; Hong Kong; Tokyo, Japan; Singapore; Frankfurt, Shanghai, China; Germany, Madrid, Spain, Milan, Italy, Stockholm, Sweden, Melbourne, Australia, Amsterdam, Netherlands and Washington, DC.
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