Is Gladstone Investment Corp. overvalued or undervalued?

As of 11 May 2021, the valuation grade for Gladstone Investment Corp. moved from risky to very attractive, indicating a significant improvement in its investment appeal. The company appears undervalued, particularly when considering its P/E ratio of 8, which is notably lower than its peers such as Fidus Investment Corp. with a P/E of 9.59 and Crescent Capital BDC, Inc. at 13.31. Additionally, the EV to EBITDA ratio stands at 4.28, which is competitive compared to the industry, while the dividend yield of 14.95% further enhances its attractiveness to income-focused investors.
In the context of recent performance, Gladstone Investment Corp. has underperformed against the S&P 500 over the 1-week, 1-month, and 3-year periods, with returns of -2.03%, -1.82%, and -0.28% respectively, while the S&P 500 delivered positive returns. However, over the 5-year period, the stock has appreciated by 50.81%, which, while still trailing the S&P 500's 96.61%, suggests potential for recovery and growth. Overall, the combination of low valuation ratios and a high dividend yield positions Gladstone Investment Corp. as an attractive investment opportunity.