Nuveen Churchill Direct Lending (NYSE:NCDL – Get Free Report) and Gladstone Capital (NASDAQ:GLAD – Get Free Report) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their valuation, dividends, institutional ownership, analyst recommendations, risk, earnings and profitability.
Insider & Institutional Ownership
10.7% of Gladstone Capital shares are held by institutional investors. 0.6% of Nuveen Churchill Direct Lending shares are held by insiders. Comparatively, 4.0% of Gladstone Capital shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.
Profitability
This table compares Nuveen Churchill Direct Lending and Gladstone Capital’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Nuveen Churchill Direct Lending | 43.35% | 11.88% | 5.25% |
| Gladstone Capital | 84.60% | 9.43% | 5.64% |
Volatility and Risk
Dividends
Nuveen Churchill Direct Lending pays an annual dividend of $1.80 per share and has a dividend yield of 13.1%. Gladstone Capital pays an annual dividend of $1.98 per share and has a dividend yield of 9.2%. Nuveen Churchill Direct Lending pays out 98.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Gladstone Capital pays out 58.4% of its earnings in the form of a dividend. Gladstone Capital has raised its dividend for 4 consecutive years.
Analyst Recommendations
This is a summary of recent ratings and price targets for Nuveen Churchill Direct Lending and Gladstone Capital, as provided by MarketBeat.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Nuveen Churchill Direct Lending | 0 | 3 | 1 | 0 | 2.25 |
| Gladstone Capital | 0 | 3 | 0 | 0 | 2.00 |
Nuveen Churchill Direct Lending presently has a consensus price target of $16.63, indicating a potential upside of 21.12%. Gladstone Capital has a consensus price target of $24.50, indicating a potential upside of 13.48%. Given Nuveen Churchill Direct Lending’s stronger consensus rating and higher probable upside, equities research analysts plainly believe Nuveen Churchill Direct Lending is more favorable than Gladstone Capital.
Earnings and Valuation
This table compares Nuveen Churchill Direct Lending and Gladstone Capital”s gross revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Nuveen Churchill Direct Lending | $224.04 million | 3.03 | $116.32 million | $1.82 | 7.54 |
| Gladstone Capital | $96.62 million | 4.99 | $94.72 million | $3.39 | 6.37 |
Nuveen Churchill Direct Lending has higher revenue and earnings than Gladstone Capital. Gladstone Capital is trading at a lower price-to-earnings ratio than Nuveen Churchill Direct Lending, indicating that it is currently the more affordable of the two stocks.
Summary
Gladstone Capital beats Nuveen Churchill Direct Lending on 9 of the 17 factors compared between the two stocks.
About Nuveen Churchill Direct Lending
Nuveen Churchill Direct Lending Corp. is a specialty finance company focused primarily on investing in senior secured loans to private equity-owned U.S. middle market companies. It has elected to be regulated as a business development company. Nuveen Churchill Direct Lending Corp. is based in NEW YORK.
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.
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