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Bain Capital Specialty Finance (BCSF)
NYSE:BCSF
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Bain Capital Specialty Finance
(NYSE:BCSF)
Rating:66Neutral
Price Target:―
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. SPDR S&P 500 ETF (SPY)
Market Cap
$987.95M
Dividend Yield11.03%
Average Volume (3M)309.89K
Price to Earnings (P/E)8.7
Beta (1Y)0.53
Revenue Growth12.24%
EPS Growth-3.21%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength81
IndustryAsset Management
Share Statistics
EPS (TTM)0.50
Shares Outstanding64,868,510
10 Day Avg. Volume256,631
30 Day Avg. Volume309,891
Financial Highlights & Ratios
PEG Ratio-3.77
Price to Book (P/B)0.83
Price to Sales (P/S)0.00
P/FCF Ratio-12.08
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.67Price Target Upside8.53% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Bain Capital Specialty Finance Business Overview & Revenue Model
Company DescriptionBain Capital Specialty Finance, Inc. is business development company specializing in direct loans to middle-market companies. The fund seeks to invest in senior investments with a first or second lien on collateral, senior first lien, stretch senior, senior second lien, unitranche, mezzanine debt, junior securities, other junior investments, and secondary purchases of assets or portfolios that primarily consist of middle-market corporate debt. It typically invests in companies with EBITDA between $10 million and $150 million.
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 demonstrates strong profitability with a high net profit margin and stable EBIT margin, supported by a strong balance sheet with no debt and improved return on equity. However, revenue contraction and significantly negative cash flow raise concerns about future growth and liquidity.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 | |||||
| TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 172.00M | 138.19M | 297.79M | 116.51M | 124.06M | 13.91M | Gross Profit |
| 151.49M | 138.19M | 236.24M | 62.27M | 74.50M | -22.43M | EBIT |
| 158.98M | 123.89M | 224.98M | 158.63M | 119.94M | 8.51M | EBITDA |
| 51.70M | 199.15M | 0.00 | 157.73M | 0.00 | 0.00 | Net Income Common Stockholders |
| 116.43M | 119.42M | 123.38M | 105.48M | 119.81M | 8.28M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 23.07M | 97.10M | 49.40M | 59.78M | 117.42M | 54.68M | Total Assets |
| 2.61B | 2.63B | 2.47B | 2.59B | 2.57B | 2.60B | Total Debt |
| 1.41B | 0.00 | 1.26B | 1.39B | 1.41B | 1.46B | Net Debt |
| 1.38B | -53.52M | 1.21B | 1.33B | 1.30B | 1.40B | Total Liabilities |
| 1.49B | 1.49B | 1.34B | 1.48B | 1.47B | 1.54B | Stockholders Equity |
| 1.12B | 1.14B | 1.14B | 1.12B | 1.10B | 1.07B |
| Cash Flow | Free Cash Flow | ||||
| -79.16M | -27.10M | 219.26M | -316.83M | 265.55M | 89.42M | Operating Cash Flow |
| -79.16M | -27.10M | 219.26M | -316.83M | 265.55M | 89.42M | Investing Cash Flow |
| -198.33M | 0.00 | 0.00 | -431.04M | 221.82M | 22.26M | Financing Cash Flow |
| -57.65M | 14.25M | -231.43M | 238.33M | -138.63M | -76.52M |
Bain Capital Specialty Finance Technical Analysis
Negative
15.36
Price Trends
15.57
Negative
16.46
Negative
16.10
Negative
Market Momentum
0.02
Negative
46.63
Neutral
46.49
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 15.36 is below the 20-day moving average (MA) of 15.38, below the 50-day MA of 15.57, and below the 200-day MA of 16.10, indicating a bearish trend. The MACD of 0.02 indicates Negative momentum. The RSI at 46.63 is Neutral, neither overbought nor oversold. The STOCH value of 46.49 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 1 New Risks
1.
Our business is dependent on bank relationships and recent strain on the banking system may adversely impact us. Q1, 2023
Bain Capital Specialty Finance Peers Comparison
Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $966.53M | 6.82 | 17.56% | 14.07% | 46.14% | 34.91% | |
71 Outperform | $889.24M | 10.13 | 8.86% | 10.06% | 14.33% | 25.35% | |
70 Outperform | $996.15M | 11.19 | 7.59% | 12.25% | 93.63% | 24.41% | |
68 Neutral | $1.09B | 14.62 | 8.52% | 11.15% | 4.85% | -37.38% | |
66 Neutral | $987.95M | 8.72 | 9.87% | 11.03% | 12.24% | -3.21% | |
65 Neutral | $1.14B | 10.66 | 8.11% | 12.07% | -3.55% | -20.43% | |
64 Neutral | $12.66B | 9.79 | 7.67% | 17015.07% | 12.23% | -6.06% |
* Financial Sector Average
Performance Comparison
BCSF
Bain Capital Specialty Finance
15.36
0.83
5.71%
CSWC
Capital Southwest
20.60
-2.56
-11.05%
NMFC
New Mountain Finance
10.60
-0.64
-5.69%
PFLT
Pennantpark $
10.04
-0.07
-0.69%
SLRC
SLR Investment Corp.
16.42
1.69
11.47%
TRIN
Trinity Capital
14.47
1.63
12.69%
Bain Capital Specialty Finance Earnings Call Summary
Earnings Call Date:May 05, 2025
(Q1-2025)
| % Change Since: 0.79%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call reflects a generally strong performance with solid income and dividend coverage, robust credit quality, and strategic positioning for future volatility. However, there are challenges, including a decrease in investment income, decline in originations, and some realized and unrealized losses.Q1-2025 Updates
Positive Updates
Solid First Quarter Results
Q1 net investment income per share was $0.50, representing an annualized yield on book value of 11.3%. Q1 earnings per share were $0.44, reflecting an annualized return on book value of 10.0%.
Strong Dividend Coverage
Net investment income was well in excess of the regular dividend, with 119% dividend coverage. The Board declared a second-quarter dividend of $0.42 per share, plus an additional dividend of $0.03 per share.
High Quality Interest Income
The results were driven by high-quality interest income earned from middle-market borrowers and stable credit performance across the portfolio.
Robust Portfolio and Credit Quality
Investments on non-accrual represented only 1.4% at amortized cost and 0.7% at fair value. Risk rating 1 and 2 investments comprised 95% of the portfolio.
Well-Positioned for Volatility
Net leverage ratio was 1.17x, within the target range of 1.0x to 1.25x, providing ample dry powder in the current environment.
Unsecured Notes Issuance
Issued $350 million of unsecured notes maturing in March 2030 at a spread of 190 basis points, swapped to floating notes at SOFR plus 190 basis points.
Negative Updates
Decrease in Investment Income
Total investment income was $66.8 million, down from $73.3 million in the previous quarter, due to a decrease in average investment balance and lower portfolio risk.
Decline in Gross Originations
Q1 BCSF’s gross originations were $277 million, down 31% year-over-year, amid high competition in middle-market direct lending.
Realized and Unrealized Losses
The company had net realized and unrealized losses of $3.6 million for the quarter.
Company Guidance
In the recent earnings call for Bain Capital Specialty Finance, the company reported solid first-quarter results for the fiscal year 2025, ending March 31. The net investment income per share was $0.50, indicating an annualized yield on book value of 11.3%, with a dividend coverage of 119%. Earnings per share stood at $0.44, reflecting an annualized return on book value of 10.0%. The net asset value per share slightly decreased by $0.01 from the previous quarter to $17.64. The Board declared a second-quarter dividend of $0.42 per share, plus an additional $0.03 per share, resulting in a total dividend yield of 10.2% on ending value. The company noted a 31% year-over-year decline in gross originations amounting to $277 million amidst competitive market conditions. Its investment portfolio, valued at $2.5 billion, earned a weighted average yield of 11.5%, with 93% of debt investments at floating rates. The company's net leverage ratio at quarter-end was 1.17x, supported by strong liquidity of $823 million. The management highlighted their strategic focus on middle-market borrowers and sectors like software, healthcare, and business services, ensuring resilience against market volatility.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.