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Saratoga Investment Corp falls short of Wall Street's fiscal 2Q earnings estimate, but beats on revenue thanks to asset growth

Chief investment officer Michael Grisius says Saratoga's long-term strategy is to grow assets without sacrificing the quality of its investment portfolio
Saratoga provides financing to middle-market businesses

Saratoga Investment Corp (NYSE:SAR), the New York-based specialty finance company, fell short of Wall Street’s earnings estimate for its fiscal second quarter, but beat its revenue forecast as its management attempted to grow assets without sacrificing the quality of its investment portfolio.

Saratoga reported that its earnings per share came in at $0.45 per share on revenue of $11.4 million. The results were mixed in the eyes of Wall Street’s analysts who had expected per-share earnings of $0.56 on revenue of $10.49 million.

In the three months until the end of August, Saratoga saw its assets under management climb to $392.88 million from $332.97 million in the year-ago quarter as the company took on investments in new platforms, with another four new portfolio companies added in the quarter.

“This fiscal quarter has again demonstrated our long-term strategy to grow assets without sacrificing the quality of our investment portfolio, something we were able to accomplish this quarter with significant success,” noted Michael Grisius, Saratoga’s president and chief investment officer in a statement.

At a time when interest rates are poised to rise, the company is set to benefit as 82% of its interest earnings investments have floating rate interest rates while all of its debt at the close of the quarter is fixed-rate.

The company’s net asset value came to $172.7 million at the close of August, which represents an increase of $39.2 million from the NAV of $133.5 million reported at the end of the year-ago quarter.

Saratoga provides financing to middle-market businesses and invests primarily in leveraged loans, mezzanine debt, and, to a lesser extent, equity to provide financing for strategic acquisitions, recapitalizations and growth initiatives in partnership with business owners and management teams.

Saratoga shares closed down 1.48% to hit $23.37 on Wednesday.

Contact Ellen Kelleher at [email protected]

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