OFS Capital (OFS) AI Stock Analysis

• Market Cap: $41.67M
• Dividend Yield: 25.87%
• Average Volume (3M): 92.94K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.40
• Revenue Growth: -14.76%
• EPS Growth: N/A
• Country: US
• Employees: 53
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.20
• Shares Outstanding: 13,398,078
• 10 Day Avg. Volume: 100,580
• 30 Day Avg. Volume: 92,943
• PEG Ratio: <0.01
• Price to Book (P/B): 0.52
• Price to Sales (P/S): 2.24
• P/FCF Ratio: 1.46
• Enterprise Value/Market Cap: 2.25
• Enterprise Value/Revenue: 2.40
• Enterprise Value/Gross Profit: 49.09
• Enterprise Value/Ebitda: -3.25
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): 1.25
• Revenue Forecast (FY): $48.65M

• Rating: 56 Neutral
• Price Target: $3.50 ▼(-27.84% Downside)
• Action: Reiterated Date: 03/03/26
• Date: Action: Reiterated 03/03/26

The score is held back primarily by sharply weaker TTM profitability and weak technical momentum (downtrend and negative MACD). Support comes from improved leverage and solid TTM cash generation, plus a high headline dividend yield and a moderate P/E. Earnings call takeaways are mixed: proactive refinancing/deleveraging is positive, but NII/NAV pressure and expected margin compression temper the outlook.

Positive Factors

Balance sheet improvement

Management has materially lengthened and simplified funding, cutting debt and replacing shorter facilities with an $80M Natixis asset-backed line and maturities extended to 2028–2031. This durable liability management reduces rollover risk and improves liquidity and flexibility over multiple rate cycles.

Senior‑secured, first‑lien portfolio

A highly senior, predominantly first‑lien loan book concentrated across dozens of issuers materially lowers expected loss severity versus unsecured exposures. This structural seniority supports recoveries in downturns, sustaining interest income and capital preservation over a multi‑quarter horizon.

Consistent cash generation

Sustained positive operating and free cash flow provides real liquidity to fund distributions, pay down debt, and support portfolio workouts. Reliable cash generation cushions NAV swings from mark‑to‑market moves and underpins longer‑term financial flexibility and capital allocation.

Negative Factors

Earnings volatility

The company's earnings have shown large swings across years, including a recent sharp TTM loss after prior gains. Persistent volatility in reported earnings undermines predictability of NII and distributions, complicates capital planning, and raises the risk that headline payouts are unsustainable in adverse quarters.

Net interest margin compression risk

With a predominantly floating‑rate loan book, declining reference rates directly compress investment yields while funding costs and fee income can lag. This structural sensitivity to rate moves is a sustained headwind to net investment income and margins over coming quarters absent repricing or higher spreads.

Mark‑to‑market NAV volatility

Exposure to structured credit and CLO equity introduces recurring valuation volatility that can swing NAV and reported income independent of cash flows. Such mark‑to‑market sensitivity complicates NAV stability and investor confidence and can force conservative capital actions during stress periods.

OFS Capital Business Overview & Revenue Model

Company Description

OFS Capital Corporation is a business development company specializing in direct and fund investments as well as add-on acquisitions. It provides flexible capital solutions primarily through debt capital and to a lesser extent, minority equity investments serving the needs of U.S.-based middle-market companies across a broad array of industries. It does not invest in operational turnarounds or start-up businesses. For direct, it specializes in debt and structured equity investments, recapitalizations and refinancing, management and leveraged buyouts, acquisition financings, shareholder liquidity events, growth capital, independent sponsor transactions, ESOPs, and minority investments in the lower middle market companies. It invests in the aerospace and defense, business services, consumer products and services, food and beverage, health care services, specialty chemicals, transportation and logistics, value added distribution, franchising, and industrial and niche manufacturing sectors. The firm invests in companies based in United States. It seeks to invest between $5 million and $35 million, revenues between $10 million and $200 million, annual EBITDA more than $5 million, and Enterprise value between $10 million and $500 million. The firm seeks to invest in companies with debt investment values between $5 million and $25 million. The fund uses senior secured, unitranche loans, first-lien, second-lien, subordinated/ mezzanine loans, warrants, and preferred equity securities and common equity securities. It prefers to take a minority as well as majority stake in the investments made. It also co-invests with its partners for additional capital.

How the Company Makes Money

OFS makes money primarily from the income it earns on its investment portfolio. The largest revenue driver is interest income from debt investments (e.g., senior secured and subordinated loans) made to portfolio companies; this includes cash-pay interest and may also include payment-in-kind (PIK) interest where applicable. It can also earn fee income associated with originating and structuring investments (for example, upfront/closing fees and other portfolio-company-related fees, where permitted), and it may realize capital gains (or losses) when it sells investments or when portfolio companies are acquired or recapitalized. Additional income can come from dividends or distributions on any equity or equity-linked positions it holds. As a BDC, its earnings are influenced by (i) the level of invested assets and the yield on those assets, (ii) credit performance of portfolio companies (non-accruals reduce interest income and can lead to realized/unrealized losses), (iii) prevailing interest rates when investments are floating-rate and/or when the company uses leverage, and (iv) access to financing facilities used to fund investments. Specific material partnerships beyond its external management relationship are null.

OFS Capital Financial Statement Overview

Summary

Overall financials are mixed. The income statement is the main weakness with a sharp TTM deterioration (revenue down vs 2024 and a large net loss with deeply negative margins) and a volatile multi-year profit pattern. Offsetting this, the balance sheet looks meaningfully improved with sharply lower debt and better leverage, and cash generation is solid with positive operating cash flow and free cash flow in TTM—though the gap between strong cash flow and reported losses raises earnings-quality/volatility concerns.

Income Statement

Profitability has deteriorated sharply in TTM (Trailing-Twelve-Months): revenue fell vs 2024 ($39.0M vs $48.0M) and swung to a large net loss (-$39.2M) with deeply negative operating and net margins. While results were strong in 2024 (high positive margins), the multi-year pattern is volatile (profits in 2020–2021, losses in 2022–2023, rebound in 2024, then significant decline in TTM), reducing confidence in earnings stability.

Balance Sheet

Leverage appears materially improved in TTM, with debt down significantly ($55.5M vs $246.7M in 2024) and debt-to-equity improving to ~0.43x (from ~1.43x in 2024). However, returns have weakened alongside earnings volatility: return on equity is low in TTM (~2.1%) after being meaningfully higher in 2024 (~16.5%). Overall, the capital structure looks stronger, but profitability on the equity base has recently softened.

Cash Flow

Cash generation is currently solid: operating cash flow and free cash flow are both positive in TTM (~$35.1M), improving from 2024 (~$33.0M) and well above weaker years like 2022. The key concern is the disconnect between cash flow and reported losses in TTM (large net loss alongside positive cash flow), suggesting earnings quality/volatility and potential timing or non-cash impacts; still, liquidity support from cash flow is a clear strength.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	28.53M	47.96M	56.94M	12.70M	85.75M
Gross Profit	19.45M	32.88M	4.79M	-4.33M	68.23M
EBITDA	32.81M	28.51M	-57.00K	-7.18M	57.09M
Net Income	-33.09M	28.44M	-465.00K	-7.59M	56.86M
Balance Sheet
Total Assets	346.71M	428.12M	469.82M	520.72M	569.05M
Cash, Cash Equivalents and Short-Term Investments	3.36M	6.07M	45.35M	14.94M	43.05M
Total Debt	55.45M	246.66M	299.73M	331.75M	344.81M
Total Liabilities	223.52M	255.90M	307.81M	340.29M	365.30M
Stockholders Equity	123.19M	172.22M	162.00M	180.42M	203.74M
Cash Flow
Free Cash Flow	43.64M	33.01M	21.37M	2.95M	-12.01M
Operating Cash Flow	43.64M	33.01M	21.37M	2.95M	-12.01M
Investing Cash Flow	23.17M	0.00	60.20M	-107.55M	-216.11M
Financing Cash Flow	-46.35M	-72.29M	-51.15M	-31.06M	17.35M

OFS Capital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 4.85
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OFS, the sentiment is Negative. The current price of 4.85 is above the 20-day moving average (MA) of 3.99, above the 50-day MA of 4.45, and below the 200-day MA of 6.29, indicating a bearish trend. The MACD of -0.25 indicates Positive momentum. The RSI at 22.44 is Positive, neither overbought nor oversold. The STOCH value of 1.77 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OFS.

OFS Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
WHF	63 Neutral	$157.19M	11.23	5.30%	21.24%	-55.82%	-4.97%
MRCC	59 Neutral	$98.80M	12.10	6.46%	14.03%	-34.92%	-132.22%
OFS	56 Neutral	$41.67M	-1.93	-27.67%	25.87%	-14.76%	―
SCM	55 Neutral	$252.13M	17.24	0.03%	12.83%	90.34%	-44.25%
GECC	49 Neutral	$69.01M	-2.74	-24.20%	22.43%	47.01%	-179.46%
OXSQ	46 Neutral	$153.14M	-7.18	-12.27%	24.14%	-177.91%	55.08%

OFS Capital Corporate Events

OFS Capital Secures New $80 Million Credit Facility

On February 18, 2026, OFSCC-FS, LLC, an indirect wholly owned subsidiary of OFS Capital Corporation, entered into a new revolving credit and security agreement providing for up to $80 million in borrowings, secured by a first-priority interest in substantially all of the Borrower’s assets. The Natixis-led facility features a reinvestment period running to February 18, 2029, final maturity on February 18, 2031, Term SOFR-based interest with step-up margins after the reinvestment period, unused fees, and customary covenants and limited-recourse, non-recourse-to-parent structuring.

Also on February 18, 2026, in connection with the launch of the Natixis credit facility, the Borrower fully repaid and terminated its prior revolving credit agreement arranged by BNP Paribas, with all related liens released upon repayment. The refinancing shifts OFS Capital’s subsidiary funding base to the new $80 million structure, potentially enhancing flexibility for portfolio reinvestment and aligning its liability profile with long-dated, asset-backed financing.

The most recent analyst rating on (OFS) stock is a Hold with a $5.00 price target. To see the full list of analyst forecasts on OFS Capital stock, see the OFS Stock Forecast page.

OFS Capital Extends Senior Secured Revolving Credit Facility

On January 9, 2026, OFS Capital Corporation amended its senior secured revolving credit facility with Banc of California, which provides financing for the company’s general corporate purposes and investment funding. The amendment primarily extends the facility’s maturity date by two years, from February 28, 2026, to February 28, 2028, and involved the payment of customary fees and expenses, bolstering the company’s longer-term financing visibility and liquidity profile.

The most recent analyst rating on (OFS) stock is a Hold with a $5.00 price target. To see the full list of analyst forecasts on OFS Capital stock, see the OFS Stock Forecast page.

OFS Capital to Fully Redeem Remaining 4.75% Notes

On January 8, 2026, OFS Capital Corporation notified holders of its 4.75% Notes due 2026 that it would exercise its option to redeem the remaining $16 million aggregate principal amount of these notes. The company will complete the redemption on February 9, 2026, at a price equal to 100% of the principal plus accrued and unpaid interest up to, but excluding, the redemption date, after which interest on the redeemed notes will cease to accrue, effectively retiring this tranche of debt and simplifying the company’s outstanding note obligations for investors and noteholders.

The most recent analyst rating on (OFS) stock is a Hold with a $4.50 price target. To see the full list of analyst forecasts on OFS Capital stock, see the OFS Stock Forecast page.