Following the release of its earnings report, Saratoga Investment Corp. (NYSE: SAR) shares saw a significant increase on the US stock charts after close of the market. After-hours trading showed an 8.14% rise, with the SAR stock reaching $25.50, following a regular session increase of 1.38%, closing at $23.58.
Strong Financial Performance in Key Areas
Saratoga’s improved financial performance was a driving factor behind the stock surge. The company reported increases in its Net Investment Income (NII), Adjusted NII, and Net Asset Value (NAV) compared to the previous quarter. A notable highlight was the sequential adjusted NII per share increase of 26.7%, which included one-time accrued interest benefits from the Knowland sale.
Additionally, Saratoga saw a $0.22 per share increase in NAV, and the company declared a dividend of $0.74 per share, representing a 4.2% rise. This includes continued over-earning of the current dividend, reflecting the company’s strong financial health.
Resolution of Key Investments and Dividend Yield
Saratoga’s stronger results were further underscored by the full repayment and resolution of its Knowland investment. This marked the resolution of all four of the company’s non-accrual or watchlist investments over the past year.
Saratoga has returned to an increasing NAV per share, coupled with substantial over-earning of record dividend levels. The annualized second-quarter dividend of $0.74 per share, based on the stock price of $23.26 on October 7, 2024, represents a 12.7% dividend yield.
Portfolio Growth and Investment Strategy
This quarter’s earnings were buoyed by favorable interest rate levels, with Saratoga benefiting from floating rate assets while its long-term liabilities remained fixed. The company’s net interest margins remained stable, contributing to overall growth.
Saratoga also reported approximately $56.7 million in new originations across two new portfolio companies and two follow-on investments, with a repayment of $20.5 million, resulting in a net investment increase of $36.2 million. As of August 31, 2024, Saratoga held $52.5 million in borrowings across its revolving credit facilities.