Saratoga Investment Corp
Q1 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.10%.
Did SAR Beat Earnings? Q1 2026 Results
Saratoga Investment Corp. posted a stronger-than-expected fiscal first quarter, with earnings per share of $0.91 beating the $0.72 consensus estimate by 27.04%, even as revenue of $32.32 million came in just 1.45% below the $32.79 million Wall Street expected. The headline EPS recovery, swinging sharply from a $0.05 loss last quarter, was driven primarily by $2.90 million in net realized gains, including an equity realization in the Identity investment, alongside $943,977 in net unrealized appreciation. Total investment income grew 41.5% year over year in revenue terms, though lower base interest rates and a reduced asset base, with AUM declining to $968.30 million from $1.10 billion a year ago, continued to weigh on the broader income picture. NAV per share rose to $25.52, and the company ended the quarter with $430.30 million in total undrawn borrowing capacity. Looking ahead, management acknowledged ongoing macro headwinds from tariff uncertainty and muted M&A activity, while pointing to its substantial liquidity position as a foundation for disciplined long-term portfolio growth.
- Full-period impact of Q4 originations drove sequential investment income increase
- Net interest margin expanded from $13.7 million to $15.6 million sequentially
- Interest expense decreased by $0.5 million from SBIC II debenture repayment and baby bond redemption
- Non-recurrence of $2.4 million annual excise tax recognized last quarter boosted adjusted NII
- $2.9 million of realized gains from equity realization and debt repayments
- 99.7% of credits rated in highest internal category
- 86.9% first lien debt portfolio composition
- Weighted average current yield of 10.7% on the portfolio
“This quarter's highlights include a 17.9% increase in adjusted NII per share from the previous quarter, continued growth of NAV, a strong return on equity beating the industry, two new portfolio company investments and most importantly, a continued solid performance from the core BDC portfolio in a volatile macro environment.”
Saratoga Investment CEO, on the earnings call
Forward Guidance & Outlook
Saratoga Investment expects continued headwinds from a volatile macro environment, geopolitical uncertainty, and tariff developments that have stifled M&A activity and deal volume in the lower middle market. The company has $224.3 million of cash and $430.3 million of total undrawn borrowing capacity available for deployment. Management remains confident in its pipeline, leverage structure, and underwriting standards to grow the portfolio over the long term. The annualized Q2 fiscal 2026 dividend of $0.75 per share represents an 11.8% yield based on the stock price of $25.44 as of July 7, 2025. The company continues to be prudent and discerning in terms of new commitments given current market volatility.
SAR YoY Financials
Figures from SEC filings and company reports. Not investment advice.