Franklin Resources (NYSE:BEN) vs. Gladstone Investment (NASDAQ:GAIN) Head-To-Head Analysis

Gladstone Investment (NASDAQ:GAIN) and Franklin Resources (NYSE:BEN) are both finance companies, but which is the better investment? We will compare the two companies based on the strength of their profitability, institutional ownership, analyst recommendations, dividends, risk, earnings and valuation.

Dividends

Gladstone Investment pays an annual dividend of $0.96 per share and has a dividend yield of 6.3%. Franklin Resources pays an annual dividend of $1.32 per share and has a dividend yield of 4.1%. Gladstone Investment pays out 23.0% of its earnings in the form of a dividend. Franklin Resources pays out 89.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Franklin Resources has raised its dividend for 45 consecutive years. Gladstone Investment is clearly the better dividend stock, given its higher yield and lower payout ratio.

Volatility and Risk

Gladstone Investment has a beta of 0.76, meaning that its stock price is 24% less volatile than the S&P 500. Comparatively, Franklin Resources has a beta of 1.54, meaning that its stock price is 54% more volatile than the S&P 500.

Insider and Institutional Ownership

11.8% of Gladstone Investment shares are held by institutional investors. Comparatively, 47.6% of Franklin Resources shares are held by institutional investors. 2.2% of Gladstone Investment shares are held by company insiders. Comparatively, 23.4% of Franklin Resources shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares Gladstone Investment and Franklin Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Gladstone Investment	158.95%	5.90%	2.88%
Franklin Resources	8.72%	11.55%	4.46%

Earnings and Valuation

This table compares Gladstone Investment and Franklin Resources”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Gladstone Investment	$99.08 million	6.14	$184.75 million	$4.18	3.66
Franklin Resources	$8.77 billion	1.86	$524.90 million	$1.47	21.85

Franklin Resources has higher revenue and earnings than Gladstone Investment. Gladstone Investment is trading at a lower price-to-earnings ratio than Franklin Resources, indicating that it is currently the more affordable of the two stocks.

Analyst Ratings

This is a summary of recent recommendations and price targets for Gladstone Investment and Franklin Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Gladstone Investment	0	0	3	1	3.25
Franklin Resources	1	6	4	0	2.27

Gladstone Investment presently has a consensus price target of $16.75, suggesting a potential upside of 9.62%. Franklin Resources has a consensus price target of $35.89, suggesting a potential upside of 11.74%. Given Franklin Resources’ higher possible upside, analysts plainly believe Franklin Resources is more favorable than Gladstone Investment.

Summary

Franklin Resources beats Gladstone Investment on 11 of the 18 factors compared between the two stocks.

About Gladstone Investment

Gladstone Investment Corporation is business development company, specializes in lower middle market, mature stage, buyouts; refinancing existing debt; senior debt securities such as senior loans, senior term loans, lines of credit, and senior notes; senior subordinated debt securities such as senior subordinated loans and senior subordinated notes; junior subordinated debt securities such as subordinated notes and mezzanine loans; limited liability company interests, and warrants or options. The fund does not invest in start-ups. The fund seeks to invest in manufacturing, consumer products and business/consumer services sector. It seeks to invest in small and mid-sized companies based in the United States. The fund prefers to make debt investments between $5 million and $30 million and equity investments between $10 million and $40 million in companies. The fund seeks to invest in companies with revenue between $20 million and $100 million. The fund invests in companies with EBITDA from $3 million to $20 million. It seeks minority equity ownership and prefers to hold a board seat in its portfolio companies. It also prefers to take majority stake in its portfolio companies. The fund typically holds the investments for seven years and exits via sale or recapitalization, initial public offering, or sale to third party.

About Franklin Resources

Franklin Resources, Inc. is a publicly owned asset management holding company. Through its subsidiaries, the firm provides its services to individuals, institutions, pension plans, trusts, and partnerships. It launches equity, fixed income, balanced, and multi-asset mutual funds through its subsidiaries. The firm invests in the public equity, fixed income, and alternative markets. Franklin Resources, Inc. was founded in 1947 and is based in San Mateo, California with an additional office in Calgary, Canada; Dubai, United Arab Emirates; Edinburgh, United Kingdom; Fort Lauderdale, United States; Hyderabad, India; London, United Kingdom; Rancho Cordova, United states; Shanghai, China; Singapore; Stamford, United States; and Vienna, Austria.