Saratoga Investment Corp. (SAY) Stock Analysis

Why this analysis is different

• A sector-relative MoonshotScore — five pillars (business quality, financial safety, valuation, growth durability, momentum) re-ranked nightly against the full universe of US-listed common stocks.
• An AI Council read across up to eight perspectives — value, macro, quantitative, and momentum lenses — that shows where they disagree instead of averaging the tension away.
• Figures come straight from FMP and Yahoo Finance filings data. The AI writes the narrative around the numbers — it never edits the numbers.

Saratoga Investment Corp. (SAY) Financial Services Profile

Saratoga Investment Corp. (SAY) is a specialty finance company and business development company (BDC) focused on leveraged loans and mezzanine debt for U.S. middle-market companies. With a high dividend yield of 14.67% and a P/E ratio of 17.16, Saratoga aims to generate income and capital appreciation through direct lending and loan syndicates.

What Is the Investment Thesis for SAY?

With a high dividend yield of 14.67%, the company offers substantial income potential for investors seeking yield in a low-interest-rate environment. The company's P/E ratio of 17.16 suggests a reasonable valuation relative to its earnings. Growth catalysts include the increasing demand for capital from middle-market companies and Saratoga's ability to leverage its SBIC-licensed subsidiary to access additional investment opportunities. However, potential risks include credit risk associated with lending to smaller businesses and sensitivity to changes in interest rates. Monitoring the company's net interest margin and asset quality will be crucial for assessing its long-term performance.

Based on FMP financials and quantitative analysis

SAY Key Highlights

Market capitalization of $314M indicates a mid-sized player in the specialty finance sector.

• P/E ratio of 17.16 suggests a potentially undervalued stock compared to industry peers.
• Profit margin of 27.8% demonstrates strong profitability in its lending operations.
• Gross margin of 75.5% indicates efficient management of interest income and expenses.
• Dividend yield of 14.67% provides a high income stream for investors.

Who Are SAY's Competitors?

SAY is benchmarked below against 8 industry peers on price, market cap, and our AI MoonshotScore.

AI Score by Stock Expert AI · Price data: FMP / Yahoo Finance

What Are SAY's Key Strengths?

High dividend yield attracts income-seeking investors.

• Experienced management team with expertise in credit analysis.
• SBIC license provides access to lower-cost capital.
• Focus on underserved middle-market lending space.

What Are SAY's Weaknesses?

Small market capitalization compared to larger BDCs.

• Concentration in leveraged loans and mezzanine debt increases credit risk.
• Sensitivity to changes in interest rates.
• Reliance on external financing to fund investments.

What Could Drive SAY Stock Higher?

Continued deployment of capital into new middle-market lending opportunities.

• Leveraging the SBIC license to access government-backed financing.
• Potential acquisitions of complementary businesses to expand market reach.
• Growth in the middle-market lending sector driving demand for Saratoga's services.

What Are the Key Risks for SAY?

Financial-distress signal — its Altman Z-Score of -0.45 sits in the distress zone (elevated bankruptcy risk).

• Inconsistent delivery — missed Wall Street EPS estimates in 5 of the last 8 reported quarters.
• Weak fundamentals — a Piotroski F-Score of 2/9 flags soft profitability, leverage or efficiency.
• Economic downturn leading to increased loan defaults and credit losses.
• Rising interest rates increasing borrowing costs and reducing demand for loans.
• Competition from other BDCs and lenders in the middle-market space.
• Changes in regulations affecting BDCs and SBICs.
• Credit risk associated with lending to smaller, less established companies.

What Are the Growth Opportunities for SAY?

• Expansion of Direct Lending Activities: Saratoga can grow by increasing its direct lending activities to middle-market companies. The market for middle-market lending is estimated to be worth hundreds of billions of dollars, offering ample opportunities for Saratoga to deploy capital. By focusing on building relationships with borrowers and offering customized financing solutions, Saratoga can increase its market share and generate higher returns. This expansion can be achieved within the next 3-5 years.
• Leveraging SBIC License: Saratoga's SBIC-licensed subsidiary provides access to government-backed financing, allowing it to invest in smaller businesses with lower borrowing costs. The SBIC program is designed to stimulate investment in small businesses, providing a stable source of capital for Saratoga. By leveraging this license, Saratoga can enhance its returns and diversify its investment portfolio. This is an ongoing opportunity.
• Strategic Acquisitions: Saratoga can pursue strategic acquisitions of other specialty finance companies or lending platforms to expand its geographic reach and product offerings. The specialty finance industry is fragmented, with numerous smaller players that could be attractive acquisition targets. By acquiring complementary businesses, Saratoga can achieve economies of scale and enhance its competitive position. This could materialize within the next 2-3 years.
• Increased Participation in Loan Syndicates: Saratoga can increase its participation in loan syndicates to diversify its investment portfolio and reduce credit risk. Loan syndicates allow multiple lenders to participate in a single loan, spreading the risk among a larger group of investors. By participating in loan syndicates, Saratoga can access a wider range of investment opportunities and reduce its exposure to any single borrower. This is an ongoing opportunity.
• Development of New Financial Products: Saratoga can develop new financial products and services to meet the evolving needs of middle-market companies. This could include offering specialized financing solutions for specific industries or developing innovative lending structures that provide greater flexibility for borrowers. By offering differentiated products, Saratoga can attract new customers and increase its market share. This is a longer-term opportunity with a potential timeline of 3-5 years.

What Are SAY's Competitive Advantages?

• SBIC license provides access to government-backed financing and regulatory advantages.
• Expertise in middle-market lending and credit analysis.
• Established relationships with borrowers and intermediaries.
• Business Development Company (BDC) structure allows access to public capital markets.

What Does SAY Do?

Saratoga Investment Corp. is a specialty finance company that focuses on providing financing solutions to middle-market companies in the United States. The company was formed to take advantage of the growing need for capital among smaller businesses that may not have access to traditional lending sources. Saratoga primarily invests in leveraged loans and mezzanine debt, offering both direct lending and participation in loan syndicates. These investments are designed to generate both current income and capital gains for Saratoga and its shareholders. As a business development company (BDC), Saratoga operates under the Investment Company Act of 1940. This regulatory framework provides a structure that allows Saratoga to raise capital from public markets and invest it in private companies. The company’s strategy involves careful selection of investment opportunities, with a focus on companies with strong management teams, defensible market positions, and growth potential. Saratoga's SBIC-licensed subsidiary enhances its ability to provide capital to small businesses, further solidifying its position in the middle-market lending space. Saratoga Investment Corp. is traded on the New York Stock Exchange under the ticker symbol 'SAR'.

What Products and Services Does SAY Offer?

• Invests in leveraged loans issued by U.S. middle-market companies.
• Provides mezzanine debt financing to support growth and acquisitions.
• Participates in loan syndicates to diversify investment risk.
• Operates as a business development company (BDC) under the Investment Company Act of 1940.
• Utilizes an SBIC-licensed subsidiary to enhance investment capabilities.
• Generates income through interest payments and capital appreciation.

How Does SAY Make Money?

• Generates revenue primarily through interest income from loans.
• Invests in debt and equity securities of middle-market companies.
• Manages a portfolio of investments to maximize returns.
• Distributes income to shareholders through dividends.

What Industry Does SAY Operate In?

Saratoga Investment Corp. operates within the investment banking and investment services industry, which is characterized by intense competition and evolving regulatory landscapes. The middle-market lending space, where Saratoga focuses, is particularly attractive due to the limited access these companies have to traditional financing options. The industry is influenced by macroeconomic factors such as interest rates, economic growth, and credit spreads. Saratoga's success depends on its ability to effectively manage credit risk, source attractive investment opportunities, and maintain a competitive cost structure.

Who Are SAY's Key Customers?

• U.S. middle-market companies seeking debt financing.
• Companies in various industries, including manufacturing, services, and technology.
• Businesses requiring capital for growth, acquisitions, or recapitalizations.

Saratoga Investment Corp. Financial Trajectory

Saratoga Investment Corp. (SAY) reported $30.8M in revenue for Q1 FY2027, reflecting 106.3% growth compared to the prior quarter. The company recorded a net loss of $5.9M, with diluted EPS of $-0.36. Quarter-over-quarter revenue has been mixed, typical for a small-cap company operating in Financial Services. Across the four most recent quarters, SAY averaged $0.26 in diluted EPS.

Company Profile

Saratoga Investment Corp. operates in the Asset Management industry within the Financial Services sector. It is headquartered in New York, US. The company is led by CEO Chris Long Oberbeck. SAY has traded publicly since 2022.

How Saratoga Investment Corp. Is Valued

Saratoga Investment Corp. carries a market capitalization of $314M, placing it in the small-cap category.

Return on equity for Saratoga Investment Corp. stands at 4.2%, a gauge of how efficiently it converts shareholder capital into profit. Return on assets is 1.4%, showing how much profit it generates from its asset base. SAY trades at a trailing price-to-earnings ratio of 17.16, roughly in line with the Financial Services sector average of ~17.50x. Its free cash flow yield is -51.6%, a gauge of the cash the business throws off relative to its market value. A current ratio of 5.83 indicates the company holds enough short-term assets to cover its near-term obligations. Its earnings yield is 5.9%, the inverse of the P/E and a quick read on earnings relative to price.

Saratoga Investment Corp.'s Piotroski F-Score is 2/9, a 9-point checklist of profitability, leverage and efficiency — flagging fundamental weakness worth scrutiny. Its Altman Z-Score of -0.45 places it in the distress zone, a signal of elevated financial risk.

Saratoga Investment Corp. has missed Wall Street's EPS estimate in 5 of its last 8 reported quarters — a mixed record worth weighing. Reported results have landed about 6.3% below estimates on average.

Over the past six months, Saratoga Investment Corp. insiders filed 2 SEC Form 4 transactions — 2 sales and 0 purchases. On net that is roughly 3K shares disposed (about $0), a signal worth weighing alongside the fundamentals.

SAY Financials

SAY Latest News

SAY Analyst Consensus

SAY MoonshotScore

Saratoga Investment Corp. Financial Services Stock: Key Questions Answered

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Always do your own research and consult a financial advisor.

Official Resources