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Bain Capital Specialty Finance (BCSF)
:BCSF
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Bain Capital Specialty Finance
(NYSE:BCSF)
66Neutral
Positive Factors
Income Sources
The SLP continues to ramp with $244 million of portfolio drop-downs and a $27.5 million add-on, driving higher income.
Net Operating Income
NOI improved to $0.53 from $0.51, exceeding the analyst's estimate.
Negative Factors
Dividend Income
Reduced dividend income from the JVs and the more recent SOFR decline are likely to sap earnings results.
Dividend Payout
The ISLP had significant net exits and reduced leverage, leading to the second straight drop in its dividend payout.
Non-Accruals
Non-accruals picked up to $45 million at cost with three new additions.
Bain Capital Specialty Finance (BCSF) vs. S&P 500 (SPY)
Market Cap
$1.08B
Dividend Yield10.08%
Average Volume (3M)390.75K
Price to Earnings (P/E)9.0
Beta (1Y)0.53
Revenue Growth12.24%
EPS Growth-3.21%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength80
IndustryAsset Management
Share Statistics
EPS (TTM)1.85
Shares Outstanding64,614,590
10 Day Avg. Volume346,188
30 Day Avg. Volume390,754
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)13.34
Price to Cash Flow (P/CF)-13.60
P/FCF Ratio301.50
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$18.00Price Target Upside9.42% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Bain Capital Specialty Finance Business Overview & Revenue Model
Company DescriptionBain Capital Specialty Finance (BCSF) is a leading business development company (BDC) that primarily focuses on providing middle-market companies with customized financial solutions. As part of the Bain Capital Credit platform, BCSF invests in a diverse portfolio of debt and equity securities, offering expertise in both direct lending and mezzanine financing. The company operates across various sectors, aiming to support businesses with capital needs for growth, acquisitions, or recapitalizations.
How the Company Makes MoneyBain Capital Specialty Finance generates revenue primarily through interest income and fees from its investment portfolio. The company extends loans and other credit facilities to middle-market companies, earning interest on these financial products. Additionally, BCSF may receive origination fees, management fees, and other transaction-related charges. The company also benefits from capital gains on equity investments within its portfolio. BCSF's ability to leverage Bain Capital's extensive network and industry expertise further enhances its deal flow and investment opportunities, contributing to its overall earnings.
Bain Capital Specialty Finance Financial Statement Overview
Summary
Bain Capital Specialty Finance shows strong profitability with a significant net profit margin improvement. However, revenue decline and negative cash flow highlight potential growth and liquidity issues, requiring attention.Income Statement
The income statement shows strong profitability with a gross profit margin of 100% due to revenue matching gross profit, indicating no direct costs. The net profit margin improved to 60.32% in 2024 from 41.43% in 2023, reflecting enhanced efficiency. However, the revenue declined by 25.03% from 2023 to 2024, pointing to potential growth challenges. EBIT margin remained stable, supporting continued operational profitability. Overall, while profitability is strong, declining revenue needs attention.65
Positive
Balance Sheet
The balance sheet reflects financial stability with a strong equity position, as indicated by a debt-to-equity ratio of 0 in 2024, showing all debts have been cleared. The equity ratio is healthy at 43.30%, suggesting a solid equity base relative to assets. Return on equity improved to 11.82% in 2024 from 10.85% in 2023, demonstrating enhanced shareholder returns. The elimination of total debt in 2024 improves financial leverage, but historical fluctuations in debt levels suggest potential volatility.70
Positive
Cash Flow
Cash flow statements highlight challenges, with negative free cash flow of -$27.1 million in 2024 compared to positive $219.3 million in 2023, indicating significant cash flow deterioration. The operating cash flow to net income ratio in 2024 is negative, showcasing inefficiency in cash generation from operations. The free cash flow to net income ratio is also negative, reflecting issues in maintaining liquidity. Overall, cash flow management requires improvement to support financial health.55
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 223.19M | 297.79M | 116.51M | 124.06M | 13.91M | Gross Profit |
| 223.19M | 236.24M | 62.27M | 74.50M | -22.43M | EBIT |
| 209.59M | 224.98M | 158.63M | 119.94M | 8.51M | EBITDA |
| 0.00 | 0.00 | 157.73M | 0.00 | 0.00 | Net Income Common Stockholders |
| 119.42M | 123.38M | 105.48M | 119.81M | 8.28M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 97.10M | 49.40M | 59.78M | 117.42M | 54.68M | Total Assets |
| 2.63B | 2.47B | 2.59B | 2.57B | 2.60B | Total Debt |
| 0.00 | 1.26B | 1.39B | 1.41B | 1.46B | Net Debt |
| -97.10M | 1.21B | 1.33B | 1.30B | 1.40B | Total Liabilities |
| 1.49B | 1.34B | 1.48B | 1.47B | 1.54B | Stockholders Equity |
| 1.14B | 1.14B | 1.12B | 1.10B | 1.07B |
| Cash Flow | Free Cash Flow | |||
| -27.10M | 219.26M | -316.83M | 265.55M | 89.42M | Operating Cash Flow |
| -27.10M | 219.26M | -316.83M | 265.55M | 89.42M | Investing Cash Flow |
| 0.00 | 0.00 | -431.04M | 221.82M | 22.26M | Financing Cash Flow |
| 14.25M | -231.43M | 238.33M | -138.63M | -76.52M |
Bain Capital Specialty Finance Technical Analysis
Negative
16.45
Price Trends
17.26
Negative
16.82
Negative
16.12
Positive
Market Momentum
-0.17
Negative
42.98
Neutral
48.83
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For BCSF, the sentiment is Negative. The current price of 16.45 is below the 20-day moving average (MA) of 16.60, below the 50-day MA of 17.26, and above the 200-day MA of 16.12, indicating a neutral trend. The MACD of -0.17 indicates Negative momentum. The RSI at 42.98 is Neutral, neither overbought nor oversold. The STOCH value of 48.83 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for BCSF.
Bain Capital Specialty Finance Risk Analysis
Bain Capital Specialty Finance disclosed 88 risk factors in its most recent earnings report. Bain Capital Specialty Finance reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Bain Capital Specialty Finance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $15.26B | 9.14 | 12.40% | 8.61% | 19.95% | -10.57% | |
72 Outperform | $1.37B | 21.29 | 3.96% | 14.31% | -28.04% | -69.52% | |
68 Neutral | $717.21M | 8.59 | 12.58% | 8.33% | 2.31% | -15.06% | |
66 Neutral | $1.08B | 9.01 | 10.49% | 10.08% | 12.24% | -3.21% | |
66 Neutral | $827.54M | 10.31 | 9.77% | 11.33% | -11.85% | -3.73% | |
63 Neutral | $14.39B | 9.81 | 8.95% | 4.37% | 16.38% | -11.64% | |
58 Neutral | $684.87M | ― | -8.57% | 15.78% | 8.24% | -207.60% |
* Financial Sector Average
Performance Comparison
BCSF
Bain Capital Specialty Finance
16.23
2.25
16.09%
FDUS
Fidus Investment
20.51
3.16
18.21%
ARCC
Ares Capital
22.41
3.82
20.55%
TCPC
BlackRock TCP Capital
7.96
-0.66
-7.66%
GSBD
Goldman Sachs BDC
11.40
-1.53
-11.83%
CGBD
TCG BDC
16.25
1.70
11.68%
Bain Capital Specialty Finance Earnings Call Summary
Earnings Call Date: Feb 27, 2025 | % Change Since: -8.46% | Next Earnings Date: May 12, 2025
Earnings Call Sentiment Positive
The earnings call highlights strong net investment income, record dividends, and increased originations, indicating robust financial health and effective capital management. However, there is a slight decline in NAV and an underperformance in a specific investment, Aimbridge Hospitality. Despite these challenges, the positive aspects significantly outweigh the lowlights.Highlights
Strong Net Investment Income
Q4 net investment income per share was $0.52, representing an annualized yield on book value of 11.8%. Net investment income covered the regular dividend by 124%.
Record Dividends
Paid out record dividends totaling $1.80 per share for 2024, an increase of 13% from 2023's dividends.
Increased Originations
Originations in 2024 totaled over $6 billion for the broader platform and $1.7 billion for BCSF, more than doubling 2023 volumes.
Strong Portfolio Credit Quality
Investments on non-accrual decreased and represented 1.3% and 0.2% at amortized cost and fair value, respectively, as of December 31.
Effective Capital Management
Issued $350 million of unsecured notes maturing in March 2030 at a spread of 190 basis points, positioning well ahead of 2026 debt maturities.
Lowlights
Slight NAV Decline
Net asset value ended the year at $17.65 per share, down from $17.76 from the previous quarter.
Aimbridge Hospitality Underperformance
Aimbridge Hospitality second lien loan was impacted by meaningful company underperformance, leading to a markdown and was the primary driver of the modest NAV decline in Q4.
Company Guidance
During the Bain Capital Specialty Finance fourth quarter and full year 2024 earnings call, the guidance provided detailed several key financial metrics. The company reported a Q4 net investment income per share of $0.52, reflecting an annualized yield on book value of 11.8%, and a net investment income coverage of 124% over the regular dividend. Earnings per share for the quarter were $0.34, with an annualized return on book value of 7.8%. For the full year, the net investment income per share was $2.09, equating to an 11.8% return on equity, with earnings per share reaching $1.85, representing a total return on equity of 10.9%. The net asset value at year-end was $17.65 per share, slightly decreasing from the previous quarter. The company paid record dividends totaling $1.80 per share for the year, a 13% increase from 2023, and declared a first quarter 2025 dividend of $0.42 per share. Additionally, Bain Capital plans to distribute an extra $0.12 per share in 2025, across four quarterly payments, leveraging strong 2024 earnings. The company maintained a strong portfolio performance, with investments on non-accrual representing only 1.3% at cost and 0.2% at fair value. Bain Capital's investment strategy remains focused on first lien senior secured loans, with a weighted average spread of approximately 560 basis points, and a yield of 10.2% on new originations. The company also highlighted a robust liquidity position with total available liquidity of $170 million and a net leverage ratio of 1.13 times, falling within their target range.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.