Investment Thesis
Saratoga Investment Corp. demonstrates exceptional earnings growth (214% YoY) driven by favorable investment conditions, but carries substantial financial risk with 1.87x debt-to-equity leverage and only $4.4M in annual free cash flow inadequate to service $774.4M in long-term debt. Profitability sustainability depends heavily on continued market conditions and the company's ability to refinance or reduce leverage.
Strengths
- Exceptional net income growth of 214% YoY with diluted EPS up 184.5%
- Large asset base of $1.2B providing scale for investment operations
- Positive operating and free cash flow generation of $4.4M
Risks
- High debt-to-equity ratio of 1.87x creates significant financial leverage and refinancing risk in downturns
- Severely inadequate free cash flow ($4.4M annually) relative to $774.4M long-term debt obligations
- Low return metrics (ROA 3.3%, ROE 9.5%) indicate leverage is compensating for modest operational efficiency and earnings growth may not be sustainable if market conditions deteriorate
Key Metrics to Watch
- Debt-to-equity ratio trend and debt refinancing schedule in coming 24 months
- Free cash flow generation and operating cash flow stability through market cycles
- Return on equity and return on assets progression to validate earnings quality
Financial Metrics
Revenue
N/A
Net Income
39.2M
EPS (Diluted)
$2.49
Free Cash Flow
4.4M
Total Assets
1.2B
Cash
52.3M
Profitability Ratios
Gross Margin
N/A
Operating Margin
N/A
Net Margin
N/A
ROE
9.5%
ROA
3.3%
FCF Margin
N/A
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
1.87x
Debt/Assets
65.5%
Interest Coverage
N/A
Long-term Debt
774.4M
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-04-15T10:00:28.074429 |
Data as of: 2025-11-30 |
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