Saratoga Investment falls 4.8% after quarterly earnings miss

What happened

Saratoga Investment (SAR) fell 4.8% on October 6, 2026, because fiscal second-quarter 2027 earnings missed expectations. The company reported earnings per share of $0.46 against $0.49 expected, 6.9% below estimates, and said assets grew 2.1% for the quarter with net originations of $37.1 million that included investments in two new portfolio companies. The session closed at $15.81 on a market value of $268.8 million. GlobeNewsWire and Zacks Investment Research reported the results.

How big was the move

The session was outsized: the move was 3.2 times a typical daily move for this stock and trading volume was 2.7 times its 20-day average. The stock opened 1.5% below the previous close and fell 4.8% on the day while the S&P 500 rose 0.6%. Over the last five sessions the stock fell 7.2% as the S&P 500 rose 1.9%, leaving the stock 4.7 percentage points worse than the Financial Services sector median on the day. With a beta of 0.64, the stock tends to move less than the market, but earnings news amplified its swing on October 6, 2026. In the past five years the stock had 13 sessions with a decline of at least 4.8%. Twenty trading days later the median result was a gain of 3.9%, and 10 of 13 were higher.

The technical picture

Technically, the stock sits well below its moving averages and shows a weak trend. The stock was 7.8% below its 20-day moving average, 12.9% below its 50-day moving average and 25.8% below its 200-day moving average. The 50-day average is below the 200-day average, a sign of a weak longer-term trend. Momentum indicators pointed to heavy selling: the Relative Strength Index (14 days) was 25 (below 30, a level often called oversold). Shares were 35.8% below their 52-week high and had fallen 10.4% over one month and 12.1% over three months. Volatility was 24% annualized over 60 days, higher than 59% of its own readings over five years.

Fundamentals and valuation

The company’s recent operating metrics paint a mixed and uneven picture. For the four quarters through August 31, 2026, revenue was $31.24 billion, which grew 31329.2% from a year earlier, while diluted earnings per share were $-0.25. Gross margin was 0.1% (a year earlier: 48.9%) and operating margin was 0.1% (a year earlier: 38.5%), indicating a sharp compression versus the prior year. Free-cash-flow margin was 89.3% and return on invested capital was 1.4%. On the balance sheet, net debt was 21831.3 times EBITDA and share count over one year increased by 2.4%.

Valuation measures are unusual. Price to forward earnings was 8.1 times expected earnings and free-cash-flow yield was 10377.3%. Within the Financial Services sector, PromtFinance scores ranked the company very weak on Value (4), Quality (5), Momentum (4), Revisions (21) and Stability (19); Growth stood at 47 (Neutral). Those scores, together with the stretched balance sheet metrics, suggest investors are weighing short-term cash generation against serious questions about profitability and leverage.

Earnings and analyst expectations

Saratoga Investment reported its last quarterly result on October 6, 2026: earnings per share of $0.46 against $0.49 expected, 6.9% below estimates. The report marked zero consecutive quarters beating estimates and the average surprise over the last four reports was 4.1% below estimates. Historically, the stock tended to react negatively to earnings: the typical two-day reaction after recent reports was that the stock fell 2.2%. The next scheduled report is January 6, 2027.

Analyst expectations offered a mixed signal. The consensus price target was $21.00, 32.8% above the closing price, based on 12 analysts with a rating. Twenty-five percent of those ratings were Buy and the consensus rating was Hold. That gap between the price target and the market value of $268.8 million underscores a divergence among analysts over how to value the company given its current margins, leverage and volatile recent performance.

What to watch

• January 6, 2027: Next scheduled earnings report.
• Consensus price target $21.00, 32.8% above the closing price.
• Analysts with a rating: 12; 25% rate the stock Buy and the consensus rating is Hold.
• In the past five years the stock had 13 sessions with a decline of at least 4.8%. Twenty trading days later the median result was a gain of 3.9%, and 10 of 13 were higher.