Analyzing Gladstone Capital (NASDAQ:GLAD) and Hampshire Group (OTCMKTS:HAMP)

Gladstone Capital (NASDAQ:GLAD) and Hampshire Group (OTCMKTS:HAMP) are both small-cap finance companies, but which is the better investment? We will compare the two businesses based on the strength of their dividends, profitability, valuation, risk, institutional ownership, earnings and analyst recommendations.

Analyst Recommendations

This is a breakdown of recent ratings for Gladstone Capital and Hampshire Group, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Capital	0	1	0	0	2.00
Hampshire Group	0	0	0	0	0.00

Gladstone Capital currently has a consensus target price of $23.00, indicating a potential downside of 11.33%. Given Hampshire Group’s higher probable upside, analysts plainly believe Hampshire Group is more favorable than Gladstone Capital.

Valuation and Earnings

This table compares Gladstone Capital and Hampshire Group”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Capital	$96.62 million	5.84	$42.67 million	$3.80	6.83
Hampshire Group	N/A	N/A	N/A	N/A	N/A

Gladstone Capital has higher revenue and earnings than Hampshire Group.

Profitability

This table compares Gladstone Capital and Hampshire Group’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Capital	97.81%	10.73%	5.87%
Hampshire Group	N/A	N/A	N/A

Insider and Institutional Ownership

10.7% of Gladstone Capital shares are owned by institutional investors. Comparatively, 13.5% of Hampshire Group shares are owned by institutional investors. 4.1% of Gladstone Capital shares are owned by insiders. Comparatively, 44.4% of Hampshire Group shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock is poised for long-term growth.

Summary

Gladstone Capital beats Hampshire Group on 5 of the 8 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 Hampshire Group

Hampshire Group, Limited is a holding company. The Company is a provider of fashion apparel across a range of product categories, channels of distribution and price points. As a holding company, the Company operates through its subsidiaries, Hampshire Brands, Inc. (Hampshire Brands) and Hampshire International, LLC. Hampshire Brands designs and markets men’s sportswear to department stores, chain stores and mass market retailers under licensed brands. The Company offers a full tops assortment under the Dockers brand. Under its multi-year licensing agreement with Dockers for its men’s good category tops in the United States, the Company oversees the design, production, sales and distribution of the line to certain chain and department stores. The woven and knit line includes button down shirts, polos, fleece tops and t-shirts.