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MidCap Financial Investment Corporation (MFIC)
NASDAQ:MFIC

MidCap Financial Investment Corporation (MFIC) AI Stock Analysis

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MidCap Financial Investment Corporation

(NASDAQ:MFIC)

Rating:69Neutral
Price Target:
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
Financial Performance
MFIC reported NOI of $0.44, above the $0.41 estimate, largely due to lower incentive fees.
Valuation
Merx' valuation improved as it paid down its revolver by $7.5 million.
Negative Factors
Credit Loss
Credit loss appeared to stem from Surf OpCo, which is now marked in the 80s of cost.
Risk Management
Elevated leverage with CLO financing may add risk to the story.

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

MidCap Financial Investment Corporation Business Overview & Revenue Model

Company DescriptionApollo Investment Corporation is business development company and a closed-end, externally managed, non-diversified management investment company. It is elected to be treated as a business development company (BDC) under the Investment Company Act of 1940 (the 1940 Act) specializing in private equity investments in leveraged buyouts, acquisitions, recapitalizations, growth capital, refinancing and private middle market companies. It provides direct equity capital, mezzanine, first lien secured loans, stretch senior loans, unitranche loans, second lien secured loans and senior secured loans, unsecured debt, and subordinated debt and loans. It also seeks to invest in PIPES transactions. The fund may also invest in securities of public companies that are thinly traded and may acquire investments in the secondary market and structured products. It prefers to invest in preferred equity, common equity / interests and warrants and makes equity co-investments. It may invest in cash equivalents, U.S. government securities, high-quality debt investments that mature in one year or less, high-yield bonds, distressed debt, non-U.S. investments, or securities of public companies that are not thinly traded. It also focuses on other investments such as collateralized loan obligations (CLOs) and credit-linked notes (CLNs). The fund typically invests in construction and building materials, business services, plastics & rubber, advertising, capital equipment, education, cable television, chemicals, consumer products/goods durable and non-durable and customer services, direct marketing, energy – oil & gas, electricity and utilities. The fund also invest in aerospace & defense, wholesale, telecommunications, financial services, hotel, gaming, leisure, restaurants; environmental industries, healthcare and pharmaceuticals, high tech industries, beverages, food and tobacco, manufacturing, media – diversified & production, printing and publishing, retail, automation, aviation and consumer transport, transportation, cargo and distribution. It primarily invests in United States. It primarily invests between $20 million and $250 million in its portfolio companies. The fund seeks to make investments with stated maturities of five to 10 years.
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 Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: 4.14%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Neutral
MFIC reported strong portfolio growth and a high percentage of first lien loans, with significant new commitments and active deal sourcing. However, challenges include a slight decline in NAV, decreased investment income due to lower base rates, and ongoing issues with Merx's aircraft in Russia. The impact of trade tariffs introduces market uncertainty.
Q1-2025 Updates
Positive Updates
Strong Portfolio Growth
MFIC reported strong portfolio growth with net investment income (NII) per share of $0.37, resulting in an annualized return on equity (ROE) of 9.8%.
High Percentage of First Lien Loans
At the end of March, 99% of MFIC's direct origination portfolio was first lien, showcasing a strong credit quality.
Significant New Commitments
MFIC made $376 million of new commitments during the March quarter across 33 different companies.
Active Deal Sourcing
MidCap Financial closed approximately $6.5 billion of commitments during the March quarter, despite muted sponsor M&A activity.
Robust Investment Portfolio
MFIC's investment portfolio at the end of March had a fair value of $3.19 billion, invested across 240 companies in 49 different industries.
Negative Updates
NAV Decline
Net asset value (NAV) per share declined by $0.05 or approximately 30 basis points to $14.93.
Impact of Trade Tariffs
Current market uncertainty due to trade tariffs poses potential challenges, although MFIC expects these to be limited.
Decreased Investment Income
Total investment income for the March quarter was approximately $78.7 million, down 4.2% compared to the prior quarter.
Lower Base Rates Impacting Yield
A decline in base rates contributed to a decrease in asset yield, affecting interest income.
Merx Investment Challenges
Merx's aircraft on lease to Russian airlines were not returned, resulting in ongoing legal actions for insurance claims.
Company Guidance
In the recent earnings conference call for MidCap Financial Investment Corporation (MFIC) for the fiscal period ending March 31, 2025, the company provided detailed guidance and metrics reflecting its performance and outlook. MFIC reported a net investment income (NII) per share of $0.37, translating to an annualized return on equity (ROE) of 9.8%, and a GAAP net income per share of $0.32, corresponding to an annualized ROE of 8.7%. The net asset value (NAV) per share slightly decreased by $0.05 to $14.93, with a small positive impact of $0.01 from stock repurchases below NAV. The company highlighted stable credit quality trends and improvements in several credit metrics, such as a decrease in non-accrual investments, a decline in payment-in-kind (PIK) income, and reduced weighted average leverage among borrowers. MFIC's first-quarter new commitments totaled $376 million with a weighted average spread of 513 basis points, although spreads experienced some compression relative to previous quarters. The company declared a quarterly dividend of $0.38 per share, reflecting confidence in its financial health despite a challenging market backdrop characterized by tariff uncertainties and broad economic volatility.

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
65
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
70
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
58
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.
Breakdown
TTMDec 2023Dec 2022Mar 2022Mar 2021Mar 2020
Income StatementTotal Revenue
121.28M133.15M141.46M96.72M126.73M-95.79M
Gross Profit
141.99M276.50K94.06M96.72M85.92M-191.58M
EBIT
84.77M266.40K103.47M137.38M111.86M-116.06M
EBITDA
33.26M266.40K103.47M137.38M111.86M-116.06M
Net Income Common Stockholders
108.02M118.76M30.59M82.36M111.86M-116.06M
Balance SheetCash, Cash Equivalents and Short-Term Investments
487.58M122.13M87.09M30.60M54.62M43.68M
Total Assets
3.47B2.50B2.53B2.60B2.54B2.87B
Total Debt
1.06B1.46B1.48B1.55B1.47B1.79B
Net Debt
573.03M1.34B1.40B1.52B1.41B1.75B
Total Liabilities
1.69B1.50B1.54B1.60B1.51B1.85B
Stockholders Equity
1.77B1.01B988.11M1.00B1.04B1.02B
Cash FlowFree Cash Flow
14.12M196.38M76.07M-2.68M470.67M-482.46M
Operating Cash Flow
14.12M196.38M76.07M-2.68M470.67M-482.46M
Investing Cash Flow
0.0080.19M82.32M0.00373.36M-610.04M
Financing Cash Flow
27.54M-161.36M-101.91M-21.33M-459.70M484.89M

MidCap Financial Investment Corporation Technical Analysis

Technical Analysis Sentiment
Positive
Last Price13.08
Price Trends
50DMA
12.26
Positive
100DMA
12.81
Positive
200DMA
12.84
Positive
Market Momentum
MACD
0.21
Negative
RSI
61.36
Neutral
STOCH
71.19
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MFIC, the sentiment is Positive. The current price of 13.08 is above the 20-day moving average (MA) of 12.83, above the 50-day MA of 12.26, and above the 200-day MA of 12.84, indicating a bullish trend. The MACD of 0.21 indicates Negative momentum. The RSI at 61.36 is Neutral, neither overbought nor oversold. The STOCH value of 71.19 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 1 New Risks
1.
The Company's investment adviser sources originated loans from MidCap FinCo Designated Activity Company ("MidCap Financial"). MidCap Financial's success in originating loans depends to a significant extent on the services provided by its personnel and the personnel of its manager. If MidCap Financial and its manager are unsuccessful in originating loans, the Company's ability to reach its investment objectives may be adversely affected. Q2, 2022

MidCap Financial Investment Corporation 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
$15.24B10.7310.29%8.65%14.14%-31.30%
71
Outperform
$1.33B26.243.27%14.73%-28.04%-69.52%
69
Neutral
10.628.64%11.62%37.04%16.88%
65
Neutral
$1.15B10.798.11%11.88%-3.55%-20.43%
64
Neutral
$12.77B9.777.59%16985.66%12.30%-7.71%
SCSCM
64
Neutral
$375.95M9.2510.83%11.95%17.67%128.48%
48
Neutral
$438.14M45.371.95%14.01%-66.59%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MFIC
MidCap Financial Investment Corporation
13.08
-0.93
-6.64%
NMFC
New Mountain Finance
10.77
-0.47
-4.18%
PNNT
Pennantpark Investment
6.78
0.11
1.65%
SCM
Stellus Capital
13.39
1.07
8.69%
ARCC
Ares Capital
22.19
2.54
12.93%
GSBD
Goldman Sachs BDC
11.51
-1.75
-13.20%
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.