Saratoga Investment Corp. (SAZ) 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. (SAZ) Financial Services Profile

Saratoga Investment Corp. is a publicly traded BDC focused on providing customized financing to U.S. middle-market companies. With over 200 years of combined experience, their investment professionals manage a portfolio exceeding $4 billion. The company aims to generate current income and capital appreciation for investors.

What Is the Investment Thesis for SAZ?

The company's high dividend yield of 14.67% offers a significant income stream for investors. Saratoga's experienced management team and disciplined investment approach contribute to the stability of its portfolio. Growth catalysts include the increasing demand for financing from middle-market companies and the potential for strategic acquisitions. However, potential risks include economic downturns that could impact the credit quality of its loan portfolio and regulatory changes affecting BDCs. With a P/E ratio of 17.16, Saratoga appears reasonably valued compared to its peers.

Based on FMP financials and quantitative analysis

SAZ Key Highlights

Market capitalization of $316M, reflecting its size and market presence within the BDC sector.

• P/E ratio of 17.16, suggesting a potentially undervalued investment relative to its earnings.
• Profit margin of 27.8%, indicating efficient operations and strong profitability.
• Gross margin of 75.5%, highlighting the company's ability to generate substantial revenue from its investments.
• Dividend yield of 14.67%, providing a significant income stream for investors.

Who Are SAZ's Competitors?

SAZ 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 This table mixes two scoring engines — compare a number only with others carrying the same tag.

What Are SAZ's Key Strengths?

Experienced management team with a proven track record.

• High dividend yield provides an attractive income stream for investors.
• Customized financing solutions meet the specific needs of middle-market companies.
• Diversified investment portfolio mitigates risk.

What Are SAZ's Weaknesses?

Relatively small market capitalization compared to larger BDCs.

• Dependence on external financing to fund investments.
• Exposure to credit risk from its loan portfolio.
• Sensitivity to changes in interest rates.

What Could Drive SAZ Stock Higher?

Continued demand for financing from middle-market companies.

• Strategic acquisitions to expand its asset base.
• Development of new financing products and services.
• Increased investment in equity securities for capital appreciation.

What Are the Key Risks for SAZ?

Financial-distress signal — its Altman Z-Score of -0.36 sits in the distress zone (elevated bankruptcy risk).

• Inconsistent delivery — missed Wall Street EPS estimates in 4 of the last 8 reported quarters.
• Weak fundamentals — a Piotroski F-Score of 3/9 flags soft profitability, leverage or efficiency.
• Economic downturns could impact the credit quality of its loan portfolio.
• Increased competition from other BDCs and lenders.
• Regulatory changes affecting the BDC industry.
• Rising interest rates could increase borrowing costs.

What Are the Growth Opportunities for SAZ?

• Expansion of Lending Activities: Saratoga can capitalize on the growing demand for financing from middle-market companies by expanding its lending activities. The middle-market represents a significant opportunity, with numerous companies seeking capital for growth, acquisitions, and recapitalizations. By increasing its loan origination capabilities and expanding its geographic reach, Saratoga can grow its portfolio and generate higher returns. The timeline for this growth is ongoing, with continuous efforts to identify and pursue attractive lending opportunities. The market size for middle-market lending is estimated to be in the hundreds of billions of dollars.
• Strategic Acquisitions: Saratoga can pursue strategic acquisitions of other BDCs or asset management firms to expand its asset base and diversify its investment portfolio. Acquisitions can provide access to new markets, industries, and investment strategies. By carefully selecting acquisition targets and integrating them effectively, Saratoga can enhance its competitive position and generate synergies. The timeline for potential acquisitions is opportunistic, depending on market conditions and the availability of suitable targets. The market for BDC acquisitions is dynamic, with ongoing consolidation activity.
• Increased Investment in Equity Securities: Saratoga can increase its investment in equity securities of middle-market companies to enhance its capital appreciation potential. Equity investments can provide higher returns compared to debt investments, although they also carry higher risk. By carefully selecting equity investments and actively managing its portfolio, Saratoga can generate significant capital gains. The timeline for this growth is long-term, with a focus on identifying and supporting companies with strong growth prospects. The market for equity investments in middle-market companies is substantial, with numerous opportunities for value creation.
• Development of New Financing Products: Saratoga can develop new financing products and services to meet the evolving needs of middle-market companies. This could include offering specialized loans, mezzanine financing, or other customized solutions. By innovating and differentiating its product offerings, Saratoga can attract new clients and enhance its competitive advantage. The timeline for product development is ongoing, with continuous efforts to identify and address unmet market needs. The market for specialized financing products is growing, driven by the increasing complexity of middle-market transactions.
• Enhanced Portfolio Management: Saratoga can enhance its portfolio management capabilities to improve the performance and stability of its investment portfolio. This includes implementing more sophisticated risk management techniques, actively monitoring portfolio company performance, and providing operational support to portfolio companies. By enhancing its portfolio management capabilities, Saratoga can reduce credit losses and generate higher returns. The timeline for this improvement is ongoing, with continuous efforts to refine and optimize its portfolio management processes. The market for portfolio management services is competitive, with numerous firms offering specialized expertise.

What Are SAZ's Competitive Advantages?

• Experienced investment team with over 200 years of combined experience.
• Established relationships with middle-market companies and intermediaries.
• Customized financing solutions tailored to meet the specific needs of each portfolio company.
• Disciplined investment approach focused on generating attractive returns while managing risk.

What Does SAZ Do?

Saratoga Investment Corp. was established to provide tailored financing solutions to middle-market companies across the United States. As a business development company (BDC), Saratoga focuses on delivering both current income and capital appreciation through its investments. The company's investment strategy centers on providing debt and equity capital to businesses that typically have limited access to traditional financing sources. Saratoga's team of seasoned investment professionals brings over 200 years of combined experience, having invested over $4 billion in middle-market businesses. These professionals possess deep expertise in sourcing, underwriting, and managing investments across various industries. Saratoga's financing solutions are customized to meet the specific needs of each portfolio company, supporting their growth, acquisitions, and recapitalizations. Saratoga's approach involves close collaboration with management teams to create value and drive long-term success. The company's investment portfolio is diversified across various sectors, mitigating risk and enhancing stability. Saratoga Investment Corp. is publicly traded on the New York Stock Exchange under the ticker SAR.

What Products and Services Does SAZ Offer?

• Provides customized financing solutions to middle-market companies in the United States.
• Invests in debt and equity securities of middle-market companies.
• Supports companies' growth, acquisitions, and recapitalizations.
• Manages a diversified portfolio of investments across various sectors.
• Collaborates with management teams to create value and drive long-term success.
• Generates current income and capital appreciation for investors.

How Does SAZ Make Money?

• Originate and structure loans and investments in middle-market companies.
• Generate revenue through interest income, dividends, and capital gains.
• Manage a portfolio of investments to maximize returns and minimize risk.
• Fund investments through debt and equity offerings.

What Industry Does SAZ Operate In?

Saratoga Investment Corp. operates within the business development company (BDC) sector, which plays a crucial role in providing financing to middle-market companies. The BDC industry has experienced growth in recent years, driven by the increasing demand for alternative financing solutions. The competitive landscape includes other publicly traded BDCs, private credit funds, and traditional lenders. Saratoga differentiates itself through its customized financing solutions, experienced investment team, and focus on building long-term relationships with portfolio companies. The industry is subject to regulatory oversight, including compliance with the Investment Company Act of 1940.

Who Are SAZ's Key Customers?

• Middle-market companies seeking financing for growth, acquisitions, or recapitalizations.
• Companies with limited access to traditional financing sources.
• Companies across various industries in the United States.

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.

Saratoga Investment Corp. has missed Wall Street's EPS estimate in 4 of its last 8 reported quarters — a mixed record worth weighing. Reported results have landed about 25.2% below estimates on average.

Saratoga Investment Corp.'s Piotroski F-Score is 3/9, a 9-point checklist of profitability, leverage and efficiency — flagging fundamental weakness worth scrutiny. Its Altman Z-Score of -0.36 places it in the distress zone, a signal of elevated financial risk.

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. SAZ 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. (SAZ) Valuation Context

Valued at $316M, SAZ is classified as a small-cap stock. Relative to its peer group, SAZ's quantitative score of 37/100 is below the peer average of 63/100.

SAZ Revenue & Earnings Trend

In Q1 FY2027, SAZ generated $30.8M in top-line revenue, marking a sequential increase of 106.3%. The company recorded a net loss of $5.9M, with diluted EPS of $-0.42. Quarter-over-quarter revenue has been mixed, typical for a small-cap company operating in Financial Services. Across the four most recent quarters, SAZ averaged $0.25 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. SAZ has traded publicly since 2023.

SAZ Financials

SAZ Latest News

No recent news available for SAZ.

SAZ Analyst Consensus

SAZ MoonshotScore

SAZ Financial Services Stock FAQ

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