GAIN

We rate GLADSTONE INVESTMENT CORPORATION\DE (GAIN) as a Reduce with a composite score of 49.1/100 at a current price of $13.83. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in momentum (90th percentile) and stability (80th percentile), which together account for the majority of the composite score. Offsetting weakness in value (27th percentile) and quality (30th percentile) tempers our overall conviction. We assign a No Moat rating (37/100), Medium uncertainty, and Exemplary capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends; valuation compression risk if growth disappoints. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

GLADSTONE INVESTMENT CORPORATION\DE holds an above-average position (#10 of 38) within the Financial sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 49.1/100 places it at rank #2144 in our full 7,333-stock universe. At $551M in market capitalization, GLADSTONE INVESTMENT CORPORATION\DE is a small-cap player in the Financial space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (90th percentile), revenue contraction of -189% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

Available margin data shows operating margins of 1357%. Incomplete margin data limits our ability to fully assess the cost structure and margin trajectory, though the available metrics provide a partial view of operating efficiency.

At a current price of $13.83, GLADSTONE INVESTMENT CORPORATION\DE is trading at a premium to fundamental value. Our value factor score of 27/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. The premium valuation implies the market is pricing in significant future growth or quality improvements that are not yet fully reflected in current fundamentals.

The stock currently trades at a P/E of 3.9x (a 60% discount to the sector median of 9.8x), EV/EBITDA of 8.0x (near the sector median), P/B of 0.9x, P/S of 68.6x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Medium uncertainty rating to GLADSTONE INVESTMENT CORPORATION\DE. The stock presents a balanced risk profile: weak quality scores (30th percentile). While not risk-free, the core business fundamentals are adequate to withstand moderate economic stress, and the range of potential outcomes around our fair value estimate is manageable.

Specific risk factors that inform our assessment include: weak quality scores (30th percentile). Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 80th percentile and quality factor at the 30th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: above-average stability (80th percentile) suggests predictable business dynamics; a 10.80% dividend yield anchors total return. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate GLADSTONE INVESTMENT CORPORATION\DE's capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 23.7%, a 10.80% dividend yield, best-in-class net margins of 1357.2%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — GLADSTONE INVESTMENT CORPORATION\DE meets this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. The company returns capital via a 10.80% dividend yield, and the combination of 11.4% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, GLADSTONE INVESTMENT CORPORATION\DE receives a Reduce rating with a composite score of 49.1/100 (rank #2144 of 7,333). Our quantitative framework assigns a No Moat (37/100, trend: stable), Medium uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 52/100.

Our analysis does not support a constructive view on GLADSTONE INVESTMENT CORPORATION\DE at this time. The combination of limited competitive advantages, medium uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.