Saratoga Investment (NYSE:SAR) vs. Chicago Atlantic BDC (NASDAQ:LIEN) Financial Comparison

Saratoga Investment (NYSE:SAR) and Chicago Atlantic BDC (NASDAQ:LIEN) are both small-cap finance companies, but which is the better business? We will compare the two companies based on the strength of their analyst recommendations, institutional ownership, risk, profitability, valuation, dividends and earnings.

Risk and Volatility

Saratoga Investment has a beta of 0.54, indicating that its stock price is 46% less volatile than the S&P 500. Comparatively, Chicago Atlantic BDC has a beta of 0.28, indicating that its stock price is 72% less volatile than the S&P 500.

Institutional & Insider Ownership

19.1% of Saratoga Investment shares are held by institutional investors. Comparatively, 4.4% of Chicago Atlantic BDC shares are held by institutional investors. 10.0% of Saratoga Investment shares are held by company insiders. Comparatively, 16.9% of Chicago Atlantic BDC shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company will outperform the market over the long term.

Dividends

Saratoga Investment pays an annual dividend of $3.00 per share and has a dividend yield of 13.6%. Chicago Atlantic BDC pays an annual dividend of $1.36 per share and has a dividend yield of 14.5%. Saratoga Investment pays out 123.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Chicago Atlantic BDC pays out 170.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Analyst Recommendations

This is a summary of current ratings and recommmendations for Saratoga Investment and Chicago Atlantic BDC, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Saratoga Investment	0	6	0	0	2.00
Chicago Atlantic BDC	0	3	0	0	2.00

Saratoga Investment presently has a consensus target price of $23.63, suggesting a potential upside of 7.02%. Given Saratoga Investment’s higher possible upside, equities research analysts plainly believe Saratoga Investment is more favorable than Chicago Atlantic BDC.

Earnings & Valuation

This table compares Saratoga Investment and Chicago Atlantic BDC”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Saratoga Investment	$148.85 million	2.41	$28.09 million	$2.44	9.05
Chicago Atlantic BDC	$54.30 million	3.95	$33.28 million	$0.80	11.74

Chicago Atlantic BDC has lower revenue, but higher earnings than Saratoga Investment. Saratoga Investment is trading at a lower price-to-earnings ratio than Chicago Atlantic BDC, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Saratoga Investment and Chicago Atlantic BDC’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Saratoga Investment	30.61%	9.19%	3.09%
Chicago Atlantic BDC	33.24%	5.88%	5.41%

About Saratoga Investment

Saratoga Investment Corp. is a business development company specializing in leveraged and management buyouts, acquisition financings, growth financings, recapitalization, debt refinancing, and transitional financing transactions at the lower end of middle market companies. It structures its investments as debt and equity by investing through first and second lien loans, mezzanine debt, co-investments, select high yield bonds, senior secured bonds, unsecured bonds, and preferred and common equity. The firm prefers to invest in aerospace, automotive aftermarket and services, business products and services, consumer products and services, education, environmental services, industrial services, financial services, food and beverage, healthcare products and services, logistics, distribution, manufacturing, restaurants services, food services, software services, technology services, specialty chemical, media and telecommunications. It seeks to invest in the United States. The firm primarily invests $5 million to $50 million in companies having EBITDA of $2 million or greater and revenues of $8 million to $250 million. The firm prefer to take a majority stake. It invests through direct lending as well as participation in loan syndicates. The firm was formerly known as GSC Investment Corp. Saratoga Investment Corp. was formed on 2007 and is based in New York, New York with an additional office in Florham Park, New Jersey.

About Chicago Atlantic BDC

Chicago Atlantic BDC Inc. is a specialty finance company which has elected to be regulated as a business development company. Its investment objective is to maximize risk-adjusted returns on equity for its stockholders by investing primarily in direct loans to privately held middle-market companies, with a primary focus on cannabis companies. Chicago Atlantic BDC Inc., formerly known as CHICAGO ATLNTIC, is based in NEW YORK.