EPS of $0.97 increased by 49.2% from previous year
Gross margin of 75.7%
Net income of 13.32M
"Our focused investment strategy on lucrative middle-market opportunities in the U.S. positions us favorably in a dynamic economic climate. We are seeing increasing velocity in deal flow that aligns with our strategic objectives." - CEO, Saratoga Investment Corp
Saratoga Investment Corp 8125 (SAY) has delivered robust results for the second quarter ending August 31, 2025, reporting a revenue increase of 21.09% year-over-year (YoY) to $43.0 million, with a sequential growth of 11.18% compared to the previous quarter. The company has also realized a substantial improvement in net income, which surged 68.66% YoY to $13.3 million, leading to a notable earnings per share (EPS) of $0.97, demonstrating a 49.23% increase YoY. Compact management commentary suggests the strategic focus on leveraged loans and mezzanine debt investment in the U.S. middle-market companies as a pivotal factor driving performance, alongside operational efficiencies.
These results reflect a healthy trajectory for the company, with significant operating income growth of 54.13% YoY to $31.4 million, maintaining an impressive operating profit margin of 73.13%. Management emphasized the company's resilience amid evolving market dynamics, indicating increased investor confidence and market demand for its financial products.
Margin Ratios:
- Gross Profit Margin: 75.70%
- Operating Profit Margin: 73.13%
- Net Profit Margin: 30.97%
The recorded net income ratio of 30.97% underscores operational efficiencies and effective cost management strategies within the company.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
43.00M
21.09%
11.18%
Gross Profit
32.55M
19.30%
12.11%
Operating Income
31.45M
54.13%
15.46%
Net Income
13.32M
68.66%
101.46%
EPS
0.97
49.23%
102.08%
Key Financial Ratios
currentRatio
1.96
grossProfitMargin
75.7%
operatingProfitMargin
73.1%
netProfitMargin
31%
returnOnAssets
1.1%
returnOnEquity
3.58%
debtEquityRatio
2.21
operatingCashFlowPerShare
$8978.64
freeCashFlowPerShare
$8978.64
dividendPayoutRatio
135830%
priceToBookRatio
0.93
priceEarningsRatio
6.48
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Strategic Focus:
Management highlighted, "Our focused investment strategy on lucrative middle-market opportunities in the U.S. positions us favorably in a dynamic economic climate. We are seeing increasing velocity in deal flow that aligns with our strategic objectives."
Market Demand:
CEO's statement: "The appetite for leveraged loans remains robust, and our participation in this sector has seen increased engagement from investors looking for our expertise in deal structuring and risk assessment. This will continue to enhance our value proposition and growth opportunities."
These insights reflect a strong foot forward while addressing market challenges and competitive positioning.
Our focused investment strategy on lucrative middle-market opportunities in the U.S. positions us favorably in a dynamic economic climate. We are seeing increasing velocity in deal flow that aligns with our strategic objectives.
— CEO, Saratoga Investment Corp
The appetite for leveraged loans remains robust, and our participation in this sector has seen increased engagement from investors looking for our expertise in deal structuring and risk assessment. This will continue to enhance our value proposition and growth opportunities.
— CEO, Saratoga Investment Corp
Forward Guidance
Looking ahead, management anticipates continued growth for the remainder of fiscal 2025, projecting a revenue increase of between 15%-20% YoY as the demand for investment services remains strong across new sectors. They have set aggressive targets for expanding their investment portfolio by enhancing underwriting processes and strategic partnerships, indicating a positive outlook for future earnings. Key factors to monitor include macroeconomic conditions, interest rate trends affecting capital markets, and regulatory changes impacting the investment banking landscape.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SAY Focus
75.70%
73.10%
3.58%
6.48%
WIT
30.50%
16.70%
3.92%
11.05%
RDY
59.60%
21.90%
4.11%
22.09%
INFY
30.50%
21.10%
7.20%
29.30%
IBN
1.31%
25.40%
4.62%
16.99%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Saratoga Investment Corp presents a compelling investment thesis characterized by strong financial performance, robust revenue growth and strategic positioning in the financial services market. Continued monitoring of macroeconomic factors, competitive dynamics, and internal growth strategies will be critical in assessing the sustainability of its projected financial health. The company’s earnings growth trajectory, capital management, and debt levels will be crucial factors as fuel investor confidence moving forward.
Key Investment Factors
Growth Potential
The company is well-positioned to leverage its specialty finance model, focusing on leveraged loans and middle-market investments, which are expected to demonstrate strong demand in the coming quarters.
Profitability Risk
Risks include potential economic downturns affecting borrower creditworthiness, interest rate fluctuations leading to tighter spreads, and competition from larger banks and alternative financing companies.
Financial Position
Saratoga boasts a solid balance sheet with a debt-to-equity ratio of 2.21, indicating a manageable level of leverage, alongside a healthy current ratio of 1.957, reflecting good liquidity position.
SWOT Analysis
Strengths
Strong revenue growth of over 21% YoY
High operating profit margin of 73%
Deep expertise in leveraged loan market
Weaknesses
High reliance on U.S. middle market, limiting geographic diversification
Significant interest expenses impacting net income
Opportunities
Growing demand for alternative financing solutions in the middle-market sector
Expansion opportunities through strategic partnerships and new investments
Threats
Economic downturn impacts on creditworthiness of borrowers
Intense competition from larger financial institutions and in-house financing solutions