Saratoga Investment Corp. (NYSE: SAR) reported fiscal third‑quarter 2026 results that surpassed analyst expectations, with a net investment income of $0.61 per share—$0.02 above the consensus estimate of $0.59—and an earnings per share of $0.74, down from $0.84 in Q2 2026 but up from $0.64 a year earlier. The company’s total investment income reached $31.65 million, exceeding the $31.3 million forecast and reflecting a 1.1% sequential increase in income despite a 4.4% decline in weighted‑average current yield to 9.7% from 11.3% earlier in the year.
Saratoga’s net new commitments for the quarter totaled $17.2 million, driven by three new portfolio companies and nine follow‑on investments. The firm also broadened its exposure to BB and BBB‑rated structured credit securities, marking a strategic shift toward higher‑yield, higher‑quality assets in a low‑rate environment. The company’s net investment income growth was largely attributable to the higher mix of leveraged loan and structured credit deals, which delivered stronger yields than the broader leveraged loan market.
Liquidity remained robust, with cash and cash equivalents of $169.6 million after a $12 million baby bond repayment. The regulatory leverage ratio rose to 183.7% as a result of the increased cash balance, but the firm’s high credit quality—99.8% of credits in the highest quality category—and low non‑accrual rate of 0.2% underscore its disciplined risk management. The company’s assets under management grew to $1.016 billion, a 2.1% increase from the prior quarter.
Chairman and CEO Christian L. Oberbeck highlighted the company’s disciplined approach, noting that “the quarter’s highlights include continued NAV growth, an increase in NII of $0.03 per share, strong 13.5% return on equity, and net originations of $17.2 million.” He added that the firm is “prudent and discerning in new commitments” amid a volatile macro environment, and that M&A activity is picking up despite competitive pressures.
The market reacted positively, with the stock rising 1.4% in after‑hours trading. Analysts cited the earnings beat and robust originations as key drivers of the favorable response, noting that Saratoga’s ability to generate income and deploy capital effectively in a challenging market environment bolstered investor confidence.
The results suggest that Saratoga’s focus on high‑quality credit and disciplined origination is paying off, even as declining benchmark rates compress yields. The company’s strong liquidity position and low non‑accrual rate provide a buffer against potential credit deterioration, positioning it well for continued performance in the coming quarters.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.