Gladstone Investment (GAIN:NAS) Fundamental Valuation Report


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Gladstone Investment $11.41 (USD) Close Price as of 21/05/2018

Based on the analysis conducted in this report, Gladstone Investment, (GAIN:NAS) is found to be  Overvalued.

Company Gladstone Investment
Symbol:Exchange GAIN:NAS
Industry Financial Services:Asset Management
Close Price/Date $11.41 (USD) 21/05/2018
Weighted Average Valuation $8.88 (USD)
Summary GAIN:NAS is found to be  Overvalued by 22.2% using the 3 valuation models shown below.
Valuation Models Used Adjusted Book Value: $9.75 (USD)
(in order of importance) Comparables: $7.02 (USD)
Multiples: $9.97 (USD)
Valuation Methods Analysis This company is:
Cash Flow Basis: Undervalued on a Cash Flow Valuation basis
Comparable Company Basis: Overvalued on a Comparable Valuation basis
Asset Basis: Overvalued on an Asset Valuation basis

Valuation Details

Gladstone Investment Valuations

Summary chart

 We have up to 6 valuation points for each company. Details are at the bottom of the report.

Discounted Cash Flow and Sensitivity Analysis for GAIN:NAS

Using a discounted cash flow model we generated an intrinsic value of $23.27 (USD) for GAIN:NAS

Sensitivity Analysis

(showing how changes in the input variables impact the DCF calculation)

GAIN:NAS Current Values Valuation If Dropped * Valuation If Raised *
Calculated Value: $23.27 1% 5% 1% 5%
WACC (or Ke) 7.62 $29.61 $19.04
Terminal Growth Rate 2.60 $19.43 $29.03
Tax Rate 0.21 $24.89 $21.66
Cash Flow 57,560,592 $22.00 $24.54
Capital Expenditures 0 $23.27 $23.27
Long Term Debt 68,596,000 $23.38 $23.17

* Changes are absolute: ex WACC from 8% to 7%

Comparables Model

Using similar companies and price based ratios we generated a valuation of $7.02 (USD) for GAIN:NAS. We also generated a valuation of $10.42 (USD) using other metrics and comparables.
The comparable companies were Royce Micro-Cap Trust (RMT:NYS)

Company GAIN:NAS End Date Value
Earnings/Share $1.52 (USD)
Book Value/Share $10.28 (USD)
Sales/Share $1.74 (USD)
Cash Flow/Share ($1.45) (USD)
EBITDA/Share $0.00 (USD)
Price Based on Comps Adjustment Factor (%)
$9.66 (USD) 51.7
$9.85 (USD) -74.8
$10.64 (USD) -63.2
$0.00 (USD) -91.0
$0.00 (USD) 0.0
GAIN:NAS Ratios Used Average Values RMT:NYS
7.51 PE Ratio 6.35 6.35
1.11 PB Ratio 0.96 0.96
6.54 PS Ratio 6.10 6.10
0.00 PCF Ratio 0.00 0.00
9.15 EV to EBITDA 0.00 0.00

Multiples

Using a multiples approach we generated a valuation of  $9.97 (USD) for GAIN:NAS

Company GAIN:NAS End Date Value
Earnings/Share $1.52 (USD)
Book Value/Share $10.28 (USD)
Sales/Share $1.74 (USD)
Cash Flow/Share ($1.45) (USD)
EBITDA/Share $1.53 (USD)
Price Based on Comps Adjustment Factor
$9.89 (USD) 0
$9.11 (USD) 0
$8.97 (USD) 0
$0.00 (USD) 0
$11.89 (USD) 0
Ratios Ratio Average
PE Ratio 6.51
PB Ratio 0.89
PS Ratio 5.14
PCF Ratio 7.10
EV to EBITDA 7.79

Adjusted Book Value versus Historical Price to Book

The average the Price to Book ratio for  GAIN:NAS for the last 10 years was  0.87

We ran the Adjusted Book Value for  GAIN:NAS and generated a book value of  $11.15 (USD)
By multiplying these we get an adjusted valuation of  $9.75 (USD)

Analyst Data

In the Stockcalc database there are no analysts that provide a valuation for GAIN:NAS.

Company Overview (GAIN:NAS USD)

Price 11.41
Range 11.29 – 11.45
52 week 9.08 – 11.43
Open 11.44
Vol / Avg. 191331/110564
Mkt cap 371.12M
P/E 7.51
Div/yield 0.80/0.07
EPS 1.48
Shares 32.53M
Beta 0.82
Summary chart

Detailed Company Description

Gladstone Investment Corp is a business development company which is managed externally. Its investment manager is Gladstone Management Corporation. It invests in debt and equity securities of established private businesses operating in the United States.

Explanation of Valuation Models

We have up to 6 valuation points for each company in the database.

The Discounted Cash Flow (DCF) valuation is a cash flow model where cash flow projections are discounted back to the present to calculate value per share. DCF is a common valuation technique especially for companies undergoing irregular cash flows such as resource companies (mining, forestry, oil and gas) going though price cycles or smaller companies about to generate cash flow (junior exploration companies, junior pharma, technology firms…).

The Price Comparables valuation is the result of valuing the company we are looking at on the basis of ratios from selected comparable companies: Price to Earnings, Price to Book, Price to Sales, Price to Cash Flow, Enterprise Value (EV) to EBITDA. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

We have included the Other Comparables as a way to value companies that cannot be valued using Earnings based ratios. This technique is very useful for companies still experiencing negative cash flows such as mining exploration firms. We use Cash/Share, Book Value/Share, MarketCap, 1 Year Return, NetPPE as the ratios here. Each of these ratios for the selected comparable companies are averaged and multiplied by the values for the company we are interested in to calculate a value per share for our selected company.

Multiples are similar to Price comparables where we look at current or historic ratios for the company in question to assess what it should be worth today based on those historic ratios. We use the same 5 ratios as in the price comparables and value the company with its historic averages.

With Adjusted Book Value (ABV) we calculate the book value per share for the company based on its balance sheet and multiply that book value per share by its historical price to book ratio to calculate a value per share.

If we have Analyst coverage for the company we use the consensus target price here.

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