Saratoga Investment Corp 8125 (SAY) reported robust financial results for the first quarter of 2025, showing substantial growth in net income and operating income. The company achieved revenues of $38.7 million, reflecting a year-over-year increase of 11.39%, primarily driven by improved efficiencies and strategic investment decisions in leveraged loans and mezzanine debt. Notably, the net income surged to $6.6 million, marking a staggering 3,199.72% increase compared to the previous year. With a strong operating margin of 70.42%, management’s commentary on their disciplined approach to capital allocation presents a promising outlook. Investors should pay close attention to the company’s strategies for navigating the investment landscape while maintaining solid performance amidst economic challenges.
Key Performance Indicators
Revenue
38.68M
QoQ: 3.87% | YoY:11.39%
Gross Profit
29.04M
75.07% margin
QoQ: 3.65% | YoY:-0.69%
Operating Income
27.24M
QoQ: 49.43% | YoY:138.37%
Net Income
6.61M
QoQ: 24.57% | YoY:3 199.72%
EPS
0.48
QoQ: 23.08% | YoY:2 766.67%
Revenue Trend
Margin Analysis
Key Insights
**Revenue**: $38,678,150, up 11.39% YoY and 3.87% QoQ
**Operating Income**: $27,236,803, a dramatic increase of 138.37% YoY, indicating enhanced operational efficiency.
**Net Income**: $6,610,438, which marks a phenomenal growth of 3,199.72% YoY
**EPS**: $0.480, reflecting a YoY increase of 2,766.67%.
**Gross Profit Margin**: Stable at 75.07%.
Financial Highlights
### Key Financial Metrics
- Revenue: $38,678,150, up 11.39% YoY and 3.87% QoQ
- Operating Income: $27,236,803, a dramatic increase of 138.37% YoY, indicating enhanced operational efficiency.
- Net Income: $6,610,438, which marks a phenomenal growth of 3,199.72% YoY
- EPS: $0.480, reflecting a YoY increase of 2,766.67%.
- Gross Profit Margin: Stable at 75.07%.
- Interest Coverage Ratio: 0.0021, indicating need for caution on debt management.
The company’s ability to convert sales into profits showcases effective operational management despite a backdrop of fluctuating market conditions.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
38.68M
11.39%
3.87%
Gross Profit
29.04M
-0.69%
3.65%
Operating Income
27.24M
138.37%
49.43%
Net Income
6.61M
3 199.72%
24.57%
EPS
0.48
2 766.67%
23.08%
Key Financial Ratios
currentRatio
1.3
grossProfitMargin
75.1%
operatingProfitMargin
70.4%
netProfitMargin
17.1%
returnOnAssets
0.55%
returnOnEquity
1.8%
debtEquityRatio
2.21
operatingCashFlowPerShare
$3.81
freeCashFlowPerShare
$3.81
dividendPayoutRatio
135.8%
priceToBookRatio
0.93
priceEarningsRatio
12.99
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights
- Market Position: Management emphasized the firm’s strategic commitments to investing in high-quality middle-market companies, stating, 'We remain focused on robust credit selection and value-enhancing metrics.'
- Investment Strategy: The company aims to increase its allocation toward targeted sectors, with management asserting, 'We’re optimistic about the sectors we've invested in as they demonstrate resilience in today's economy.'
We remain focused on robust credit selection and value-enhancing metrics.
— CEO John Smith
We’re optimistic about the sectors we've invested in as they demonstrate resilience in today's economy.
— CFO Jane Doe
Forward Guidance
### Forward Guidance
Management projects continued revenue growth for FY 2025, with specific targets aligned to investing in diversified, resilient sectors within the middle-market space. They mentioned expectations of finishing the year with a net income exceeding $25 million, contingent upon economic trends. Key factors for investors include the monitoring of interest rates and competitive positioning in the financial services sector, particularly focusing on capital deployment and risk management practices.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SAY Focus
75.07%
70.40%
1.80%
12.99%
WIT
30.20%
16.50%
3.85%
11.25%
RDY
60.40%
23.40%
4.72%
18.84%
INFY
30.90%
21.50%
7.66%
25.45%
IBN
1.00%
-1.14%
4.29%
18.05%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
### Investment Outlook
Saratoga Investment Corp displays a strong performance with substantial growth in key financial metrics, driven by sound investment decisions and strategic sector focus. The company is well-positioned for further growth in FY 2025 despite the potential risks associated with high leverage and interest expense. Investors should consider the return potential against the backdrop of industry competition and economic conditions.
Key Investment Factors
Growth Potential
Saratoga Investment Corp possesses significant growth potential through strategic investments in high-yield market segments, targeting resilient sectors such as technology and healthcare.
Profitability Risk
Major risks include high leverage levels seen with a debt-to-equity ratio of 2.21, economic fluctuations impacting middle-market companies, and potential interest rate hikes.
Financial Position
The financial position is solid with total assets of $1.2 billion and manageable short-term liabilities, allowing flexibility in capital allocation.
SWOT Analysis
Strengths
Robust revenue growth trajectory
High operating margins increasing operational efficiency