MidCap Financial Investment Corporation (MFIC) AI Stock Analysis

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MidCap Financial Investment Corporation

(NASDAQ:MFIC)

69Neutral

MidCap Financial Investment Corporation's stock score is driven by its strong profitability and balance sheet, coupled with attractive valuation metrics such as a low P/E ratio and high dividend yield. However, the company faces challenges with declining revenue and cash flow, as well as below-target leverage and spread compression noted in the earnings call. Technical indicators suggest stability but indicate cautious optimism.

Positive Factors

Debt Management

Leverage was reduced through mergers to a low level of 1.16x net, which is favorable by MFIC standards.

Financial Performance

MFIC reported NOI of $0.44, above the $0.41 estimate, largely due to lower incentive fees.

Negative Factors

Credit Losses

Credit loss appeared to stem from Surf OpCo, which is now marked in the 80s of cost.

Risk Factors

Elevated leverage with CLO financing may add risk to the story.

MidCap Financial Investment Corporation (MFIC) vs. S&P 500 (SPY)

Market Cap

N/A

Dividend Yield12.62%

Average Volume (3M)726.28K

Price to Earnings (P/E)8.7

Beta (1Y)0.62

Revenue Growth37.04%

EPS Growth16.88%

CountryUS

EmployeesN/A

SectorFinancial

Sector Strength84

IndustryAsset Management

Share Statistics

EPS (TTM)0.40

Shares Outstanding93,780,280

10 Day Avg. Volume799,620

30 Day Avg. Volume726,280

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)30.98

Price to Cash Flow (P/CF)5.60

P/FCF Ratio5.60

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit10.64K

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$14.17

Price Target Upside17.69% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering6

MidCap Financial Investment Corporation Business Overview & Revenue Model

Company DescriptionMidCap Financial Investment Corporation (MFIC) is a specialty finance company that provides customized debt solutions to middle-market companies across various sectors. The company primarily focuses on direct origination of senior secured loans. MFIC operates as a business development company, offering capital solutions to companies that may not have access to traditional bank financing.

How the Company Makes MoneyMidCap Financial Investment Corporation makes money by providing loans and other credit solutions to middle-market companies. The primary revenue stream comes from the interest income generated on these loans. Additionally, MFIC may earn fees associated with the origination, structuring, and management of these loans. The company's earnings are influenced by factors such as interest rate fluctuations, credit risk management, and strategic partnerships with other financial institutions that may co-invest in loan opportunities.

MidCap Financial Investment Corporation Financial Statement Overview

Summary

MidCap Financial Investment Corporation presents a mixed financial profile. The income statement reflects robust profitability but declining revenue. The balance sheet is strong with zero debt, yet this could limit expansion. Cash flow challenges are evident with a steep drop in free cash flow. While the company maintains profitability, addressing revenue declines and improving cash flow are crucial for future growth.

Income Statement

Positive

MidCap Financial Investment Corporation shows a positive net profit margin of 89.07% in the TTM, reflecting strong profitability. However, the revenue growth rate is negative at -8.91% from the previous year, indicating a decline in revenue. The EBIT margin stands at 69.91%, showcasing efficient operations. Overall, the company demonstrates solid profitability but faces challenges with revenue growth.

Balance Sheet

Positive

The company has a strong equity base with zero total debt in the TTM, resulting in a debt-to-equity ratio of 0. The return on equity is high at 7.63%, indicating effective use of equity to generate profits. The equity ratio is 44.04%, suggesting a balanced asset financing structure. While the lack of debt offers stability, it may limit growth opportunities.

Cash Flow

Neutral

MFIC's free cash flow growth rate is negative at -92.81% in the TTM, indicating a significant decline in free cash flow. The operating cash flow to net income ratio is 0.13, suggesting that cash generation is lagging behind income. These metrics highlight potential liquidity challenges despite positive net income.

Dec 2023	Dec 2022	Mar 2022	Mar 2021	Mar 2020
Breakdown
Income Statement		Total Revenue
133.15M	141.46M	96.72M	126.73M	-95.79M
	Gross Profit
276.50K	94.06M	96.72M	85.92M	-191.58M
	EBIT
266.40K	103.47M	137.38M	111.86M	-116.06M
	EBITDA
266.40K	103.47M	137.38M	111.86M	-116.06M
	Net Income Common Stockholders
118.76M	30.59M	82.36M	111.86M	-116.06M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
122.13M	87.09M	30.60M	54.62M	43.68M
	Total Assets
2.50B	2.53B	2.60B	2.54B	2.87B
	Total Debt
1.46B	1.48B	1.55B	1.47B	1.79B
	Net Debt
1.34B	1.40B	1.52B	1.41B	1.75B
	Total Liabilities
1.50B	1.54B	1.60B	1.51B	1.85B
	Stockholders Equity
1.01B	988.11M	1.00B	1.04B	1.02B
Cash Flow		Free Cash Flow
196.38M	76.07M	-2.68M	470.67M	-482.46M
	Operating Cash Flow
196.38M	76.07M	-2.68M	470.67M	-482.46M
	Investing Cash Flow
80.19M	82.32M	0.00	373.36M	-610.04M
	Financing Cash Flow
-161.36M	-101.91M	-21.33M	-459.70M	484.89M

MidCap Financial Investment Corporation Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price12.04

Price Trends

50DMA

12.68

Negative

100DMA

12.98

Negative

200DMA

12.90

Negative

Market Momentum

MACD

-0.26

Negative

RSI

50.38

Neutral

STOCH

94.73

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MFIC, the sentiment is Neutral. The current price of 12.04 is above the 20-day moving average (MA) of 11.76, below the 50-day MA of 12.68, and below the 200-day MA of 12.90, indicating a neutral trend. The MACD of -0.26 indicates Negative momentum. The RSI at 50.38 is Neutral, neither overbought nor oversold. The STOCH value of 94.73 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for MFIC.

MidCap Financial Investment Corporation Risk Analysis

MidCap Financial Investment Corporation disclosed 84 risk factors in its most recent earnings report. MidCap Financial Investment Corporation 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

MidCap Financial Investment Corporation Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
ARCC	76 Outperform	$14.45B	8.65	12.40%	9.10%	19.95%	-10.57%
MAIN	74 Outperform	$4.80B	9.25	19.26%	5.54%	51.80%	12.05%
GSBD	71 Outperform	$1.28B	19.92	3.96%	15.29%	-28.04%	-69.52%
MFIC	69 Neutral		8.73	8.20%	12.62%	37.04%	16.88%
Sector *	63 Neutral	$12.31B	9.55	7.88%	79.24%	12.71%	-4.71%
PSEC	58 Neutral	$1.64B	―	0.78%	17.48%	-31.63%	-0.75%
TCPC	58 Neutral	$597.24M	―	-8.57%	18.09%	8.24%	-207.60%

* Financial Sector Average

Performance Comparison

MFIC

MidCap Financial Investment Corporation

12.04

-1.44

-10.68%

MAIN

Main Street Capital

54.15

7.97

17.26%

PSEC

Prospect Capital

3.69

-0.97

-20.82%

ARCC

Ares Capital

21.11

2.11

11.11%

TCPC

BlackRock TCP Capital

7.02

-1.68

-19.31%

GSBD

Goldman Sachs BDC

10.92

-2.82

-20.52%

MidCap Financial Investment Corporation Earnings Call Summary

Earnings Call Date:Feb 25, 2025

(Q4-2024)

% Change Since: -13.01%|

Next Earnings Date:May 12, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong ROE, successful CLO pricing, and significant new commitments as positive aspects. However, challenges such as a decrease in NAV per share, a decline in weighted average yield, and issues with non-accrual investments were also noted. Overall, the sentiment of the call was balanced with both positive achievements and notable challenges.

Q4-2024 Updates

Positive Updates

Strong Annualized Return on Equity (ROE)

MFIC reported an annualized ROE of 10.5% for the December quarter and 11.2% for the full year.

Significant New Commitments

MFIC made $255 million in new commitments during the December quarter and $1.06 billion for the full year.

Successful CLO Pricing

MFIC priced a $529 million CLO, the second on-balance-sheet CLO, with a blended cost of 161 basis points spread, significantly tighter than previous levels.

Merx Insurance Claims Settlement

MFIC settled a portion of its contingent insurance claims related to the Merx Russia fleet during the first quarter.

Dividend Declaration

The Board declared a quarterly dividend of $0.38 per share for shareholders of record as of March 11th, 2025.

Negative Updates

Decrease in NAV per Share

Net Asset Value (NAV) per share decreased to $14.98 at the end of December, down $0.12 or approximately 0.8%.

Decline in Weighted Average Yield

The weighted average yield at cost on the direct origination portfolio decreased to 11% for the December quarter from 11.6% in the September quarter.

Non-Accrual Investments

Investments on non-accrual were 1.3% of the portfolio at fair value, with some positions acquired from the CEFs still on non-accrual.

GAAP Net Income Per Share

GAAP net income per share was $0.26 for the December quarter, lower than the net investment income per share of $0.40.

Company Guidance

In the earnings conference call for MidCap Financial Investment Corporation (MFIC) covering the fourth quarter of 2024, several key metrics were discussed. The company reported a net investment income (NII) per share of $0.40 for the quarter and $1.71 for the full year, with a quarterly annualized return on equity (ROE) of 10.5% and a yearly ROE of 11.2%. GAAP net income per share was $0.26 for the quarter and $1.27 for the year. The NAV per share declined by $0.12 to $14.98, representing a 0.8% decrease. During the quarter, MFIC made $255 million in new commitments, contributing to a full year total of $1.06 billion. The company aims to reach a target leverage of approximately 1.4 times in the next few quarters, leveraging its affiliation with MidCap Financial, which closed $6.6 billion in commitments in the fourth quarter and $21.3 billion for the year. MFIC's investment in Merx, an aircraft leasing business, was valued at $183 million, with a blended yield of 3.2% at fair value. The call also highlighted the economic backdrop for 2025, noting strong consumer spending and a low probability of recession, while addressing risks like tariffs and federal layoffs. The company declared a quarterly dividend of $0.38 per share, payable in March 2025.

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.