Saratoga Investment (SAR) Financials

Over the past two years, Saratoga Investment Corp. (NYSE: SAR) has shown significant fluctuations in its financial performance, with recent quarters especially strong in terms of net income, revenue, and cash flows.

Positive trends:

• In Q3 2025, SAR reported robust net income continuing operations of approximately $82.19 million, a strong result compared to prior quarters.
• Total revenue for Q3 2025 was around $47.78 million, boosted by $19.7 million in net realized and unrealized capital gains on investments and $21.3 million in total non-interest income.
• Net cash from continuing operating activities in Q3 2025 rose significantly to $94.16 million, signaling excellent cash generation from core business operations.
• Total assets have steadily increased from about $974 million in Q2 2023 to nearly $1.22 billion by Q3 2025, demonstrating asset growth and expansion.
• SAR consistently generated positive net interest income in most quarters, such as $26.46 million in Q3 2025, showing effective interest margin management after deducting interest expenses.
• There has been steady common equity growth, rising from approximately $337 million in Q2 2023 to about $375 million in Q3 2025, supporting an improving balance sheet.
• Diluted earnings per share have been positive in recent quarters, with $0.64 in Q3 2025, suggesting profitability on a per-share basis.

Neutral observations:

• Long-term debt remains quite high at roughly $1.36 billion as of Q3 2025, which provides leverage but also entails interest expense of around $13 million in recent quarters.
• SAR pays dividends regularly, with payments around $8.96 million in Q3 2025, reflecting shareholder returns but also cash outflows.
• Cash and cash equivalents showed significant increases, reaching about $147.6 million in Q3 2025, enhancing liquidity.

Negative factors worth noting:

• SAR had challenged quarters earlier, including a negative net interest income in some quarters of 2024 such as Q2 2025, indicating periods of lower interest revenue or higher interest expense.
• Net realized and unrealized capital gains have been volatile; for example, a large negative capital gains amount of -$176.7 million in Q4 2024 significantly reduced total non-interest income in that period.
• Total non-interest expense surged unusually high in Q4 2024 ($34.3 million), which depressed pre-tax income and net income substantially for that quarter.
• Certain quarters experienced negative net cash flows from continuing operating activities, such as Q1 2024 with a substantial outflow exceeding $110 million.
• Fluctuating earnings per share, including occasional negative EPS (e.g., -$0.31 in Q3 2024), indicate variable profitability that may pose risks to consistency.

In summary, Saratoga Investment Corp. has demonstrated a recovery and growth trajectory after some quarters of volatility and losses. Its strong net income and cash flow generation in recent quarters, along with growing assets and equity, suggest improving fundamentals. However, investors should remain mindful of the company's leverage levels, dividend obligations, and the volatility in capital gains and operating expenses, which have caused swings in earnings and cash flow historically.