Saratoga Investment Corp. (SAR) Reports Q2 Net Loss of $6.66 Million on Portfolio Charges

Net Income YoY

-150.1%

Key highlights

• Net income decreased 150.1% year-over-year to a loss of $6.66 million
• Diluted earnings per share fell to -$0.41 from $0.84 in the prior year period
• Unrealized depreciation on investments totaled $31.6 million for the six-month period
• Total investment income for the first half of fiscal 2026 reached $61.9 million
• Monthly cash dividend of $0.25 per share remains scheduled for October 22, 2026 payment

How the Period Went

Saratoga Investment Corp. reported a significant reversal in bottom-line performance for the second quarter of 2026. Net income dropped to a loss of $6.66 million, representing a 150.1% decrease from the $13.29 million profit recorded in the same period last year. This resulted in a diluted earnings per share of -$0.41, a sharp contrast to the $0.84 reported in the year-ago quarter. While the bottom line was heavily impacted by valuation adjustments, the income-generating engine showed resilience. Total investment income for the first six months of the fiscal year reached $61.9 million, closely matching the $62.9 million generated during the comparable period in the prior year.

Margins and Profitability

The primary headwind for Saratoga during the quarter was a $31.6 million charge related to unrealized depreciation on its investment portfolio. This non-cash item significantly weighed on the net asset value and overall profitability for the first half of the fiscal year ended August 31, 2026. Such fluctuations are characteristic of Business Development Companies (BDCs) that mark their investment holdings to market values periodically. Excluding these valuation shifts, the firm's core operational capacity remained active, supported by its ongoing middle-market lending activities and the maintenance of a monthly cash dividend of $0.25 per share.

Business Overview

• Specializes in customized financing solutions for middle-market companies in the United States
• Focuses on senior secured and unitranche loans, mezzanine debt, and equity co-investments
• Targets companies with revenues typically ranging between $10 million and $150 million
• Maintains a substantial pipeline with $120.1 million in committed undrawn lending commitments as of May 2026
• Operates as a Business Development Company (BDC) subject to specific SEC regulatory frameworks

Financial Context

The quarterly results coincide with a period of technical pressure on Saratoga’s stock, which is currently trading at 15.75 per share. The stock has experienced a 26.86% decline over the past quarter, pushing its Relative Strength Index (RSI) down to 25.2, which indicates oversold market conditions. With a market capitalization of approximately $245.1 million, the firm maintains a price-to-earnings ratio of 15.9. This valuation follows a series of steady quarterly investment income figures, which have ranged from $30.6 million to $32.3 million over the past five reporting cycles, according to company data provided by IR Saratoga.

Down 4.3% since our story on 6 Oct: $15.75 when we broke it → $15.07 at the close on 13 Oct. Daily closing prices. Source: Yahoo Finance.

Show the prices

14 Sep	$17.34
15 Sep	$17.40
16 Sep	$17.59
17 Sep	$17.86
18 Sep	$17.64
21 Sep	$17.57
22 Sep	$17.75
23 Sep	$17.46
24 Sep	$17.33
25 Sep	$17.11
28 Sep	$16.80
29 Sep	$17.03
30 Sep	$16.66
1 Oct	$16.72
2 Oct	$16.48
5 Oct	$16.61
6 Oct	$15.81
7 Oct	$14.91
8 Oct	$14.97
9 Oct	$15.03
12 Oct	$14.93
13 Oct	$15.07

Industry Landscape

The Business Development Company sector is navigating a complex environment characterized by shifting interest rates and tightening credit conditions. Many BDCs are currently reporting increased unrealized depreciation as portfolio company valuations are adjusted for higher discount rates and economic uncertainty. Peers in the asset management industry are balancing high interest income from floating-rate debt against the risk of credit quality deterioration in middle-market borrowers. Saratoga’s focus on senior secured positions in its portfolio serves as a potential buffer, although recent valuation adjustments highlight the inherent sensitivity of private credit holdings to broader market sentiment.

SARATOGA INVESTMENT CORP. · financial snapshot

Share price	$15.75
Market cap	$245M
Revenue (annual)	$50M
P/E (TTM)	15.9×
1-month price change	-11.37%
Sector	Financial ServicesAsset Management

Reference market data from a third-party provider, as of the story. Not a valuation or a recommendation.