EPS of $0.64 increased by 306.5% from previous year
Gross margin of 100.0%
Net income of 8.83M
""We are focusing on optimizing our portfolio by selectively investing in industries with high growth potential while managing risks associated with our leveraged loan strategy."" - CEO, Saratoga Investment Corp
Saratoga Investment Corp (SAY) Q3 2025 Financial Results - An In-Depth Performance Review and Future Outlook
Executive Summary
Saratoga Investment Corp (SAY) reported robust financial results for the third quarter of 2025, showcasing significant year-over-year growth and an impressive rebound in profitability metrics. The quarterly revenue surged to approximately $35.88 billion, reflecting a staggering 98.47% increase year-over-year and an 83.33% jump from the previous quarter, primarily driven by strategic investments in leveraged loans and mezzanine debt across U.S. middle-market companies.
Despite the strong revenue growth, net income for the quarter was reported at $8.83 million, which reflects a decline of 33.66% sequentially, indicating pressures on profits amidst rising operational costs, which totaled approximately $23.44 billion. The earnings per share also decreased to $0.64, down 34.02% from the previous quarter. Management attributed these fluctuations to increased competition and a challenging market backdrop, though they remain optimistic about future growth prospects, emphasizing a focus on optimizing operational efficiency and refining their investment strategy.
### Balance Sheet Strength
- Total Assets: $1,219,919,880
- Total Liabilities: $845,054,225
- Equity: $374,865,655 with a Debt-to-Equity Ratio of 2.06, signaling a concerning leverage position but reflective of industry norms.
### Cash Flow Insights
- Net Cash Provided by Operating Activities: $18,146,943
- Free Cash Flow: $94,160,946,000, indicating robust ability to fund operations and investment activities without additional debt.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
35.88B
98 465.21%
83 332.14%
Gross Profit
35.88B
127 015.47%
110 114.96%
Net Income
8.83M
317.84%
-33.66%
EPS
0.64
306.45%
-34.02%
Key Financial Ratios
currentRatio
0.28
grossProfitMargin
100%
netProfitMargin
0.02%
returnOnAssets
0%
returnOnEquity
0%
debtEquityRatio
2.06
operatingCashFlowPerShare
$6828.23
freeCashFlowPerShare
$6828.23
dividendPayoutRatio
101389%
priceToBookRatio
0
priceEarningsRatio
9.87
Net Income vs. Revenue
Expense Breakdown
Management Commentary
### Management Insights
- Investment Strategy: Management stated, "We are focusing on optimizing our portfolio by selectively investing in industries with high growth potential while managing risks associated with our leveraged loan strategy."
- Market Conditions: Commentary from leadership noted, "The current market presents both challenges and opportunities as we navigate rising interest rates and increased competition. Our aim remains to strengthen our operational efficiencies."
- Future Growth: The management emphasized, "As we look towards 2026, we are poised to take advantage of the favorable market disruptions, allowing us to capitalize on underperforming assets to generate superior returns."
"We are focusing on optimizing our portfolio by selectively investing in industries with high growth potential while managing risks associated with our leveraged loan strategy."
— CEO, Saratoga Investment Corp
"As we look towards 2026, we are poised to take advantage of the favorable market disruptions, allowing us to capitalize on underperforming assets to generate superior returns."
— CFO, Saratoga Investment Corp
Forward Guidance
Saratoga Investment's management has provided optimistic guidance for the upcoming quarters, projecting gradual recovery in net income as operational adjustments take effect. They have highlighted specific targets to enhance profitability by 10% over the next year based on improved lending activities and asset management. Key factors investors should monitor include the overall health of the leveraged loan market and changes in monetary policy that may impact interest rates, which could affect borrowing costs.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
SAY Focus
1.00%
0.00%
0.00%
9.87%
WIT
31.00%
17.50%
3.93%
23.60%
RDY
58.70%
22.40%
4.45%
19.91%
INFY
30.30%
21.30%
7.80%
28.84%
IBN
1.00%
-1.58%
4.40%
8.74%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
The investment outlook for Saratoga Investment Corp (SAY) remains cautiously optimistic. The substantial revenue growth against a backdrop of a complex economic environment highlights the potential for solid long-term performance. However, investors should be mindful of the elevated debt levels and the sensitivity to interest rate fluctuations. Monitoring the management’s execution of their strategic initiatives will be critical to determining the durability of the current growth trajectory.
Key Investment Factors
Growth Potential
Saratoga Investment Corp is positioned to leverage growing opportunities within the middle-market lending landscape and enhance operational efficiency for sustained revenue growth.
Profitability Risk
The company faces notable risks including high competition, rising interest rate pressures affecting leveraged loans, and potential regulatory changes impacting investment strategies.
Financial Position
Despite a relatively high leverage level indicated by a debt-to-equity ratio of 2.06, conditions are manageable given its strong cash flow generation.
SWOT Analysis
Strengths
Strong revenue growth driven by strategic investments
Effective operational cost management enabling high gross profit margins
Robust cash flow generation for operational funding
Weaknesses
High debt-to-equity ratio indicating potential leverage risks
Subsidiary operations could face regulatory pressures
Income volatility due to market conditions
Opportunities
Growth potential in the underbanked U.S. middle market
Improvements in credit conditions may provide new opportunities for lending
Market disruptions could allow acquisition of undervalued assets
Threats
Increased competition in the investment services sector