Saratoga Investment Corp
Q3 2026 Earnings
Market Reaction
S&P 500 over the same 30 days: +0.38%.
Did SAR Beat Earnings? Q3 2026 Results
Saratoga Investment Corp. beat analyst expectations in fiscal Q3 2026, posting earnings of $0.74 per share on total investment income of $31.65 million, with adjusted net investment income of $0.61 per share clearing the $0.59 consensus estimate. The business development company navigated a challenging rate environment, as its weighted average portfolio interest rate slipped to 10.6% from 11.8% a year ago, pulling total investment income down 11.8% year-over-year, though the sequential recovery of 3.3% from the prior quarter signaled stabilizing momentum. A $500,000 reduction in interest expenses, following $17.00 million in baby bond repayments and the replacement of the Encina Credit Facility with a new $85.00 million Valley National Bank facility, helped cushion margins. AUM crossed $1.02 billion, up 5.8% year-over-year, and net originations of $17.20 million in the quarter were followed by approximately $89.30 million in post-quarter closings, against $30.50 million in repayments, reinforcing management's confidence in a declared Q4 base dividend of $0.75 per share, representing a 12.9% annualized yield.
- Core BDC net interest margin increased from $13.1 million to $13.5 million driven by $0.5 million decrease in interest expenses from baby bond repayments
- Net originations of $17.2 million from $72.1 million in new investments and nine follow-ons offset by $54.9 million in repayments
- OID accelerations from specific repayments contributed to sequential investment income increase
- 99.8% of credits rated in highest category with only one investment on non-accrual
- Core non-CLO portfolio marked up by $2.9 million including realized gains
- Weighted average current yield on portfolio of 9.7% based on fair values
“This quarter's highlights include continued NAV growth from the previous quarter and year with stable NAV per share, an increase in NII of $0.03 per share from the previous quarter, a strong 13.5% return on equity beating the industry, net originations of $17.2 million including three new portfolio companies, and importantly, continued solid performance from the core BDC portfolio in a volatile macro environment.”
Saratoga Investment CEO, on the earnings call
Forward Guidance & Outlook
Management noted renewed momentum in M&A activity and expects continued strong origination activity, with approximately $89.3 million of new originations closed or in closing post quarter-end in four new portfolio companies and six follow-ons, against $30.5 million in repayments, for a net anticipated increase of approximately $58.8 million. The company declared a Q4 fiscal 2026 base dividend of $0.75 per share ($0.25 monthly), representing a 12.9% annualized yield. Management remains cautious but optimistic, believing broader private credit concerns are idiosyncratic rather than systemic, and that Saratoga's lower middle market positioning insulates it. The company has $395.6 million in total undrawn borrowing capacity and $169.6 million in cash to deploy accretively.
SAR YoY Financials
Figures from SEC filings and company reports. Not investment advice.