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OFS Capital (OFS)
:OFS
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OFS Capital
(NASDAQ:OFS)
64Neutral
OFS Capital (OFS) vs. S&P 500 (SPY)
Market Cap
$121.52M
Dividend Yield14.99%
Average Volume (3M)78.03K
Price to Earnings (P/E)4.3
Beta (1Y)0.37
Revenue Growth-32.33%
EPS GrowthN/A
CountryUS
Employees53
SectorFinancial
Sector Strength84
IndustryAsset Management
Share Statistics
EPS (TTM)2.12
Shares Outstanding13,398,078
10 Day Avg. Volume66,024
30 Day Avg. Volume78,032
Financial Highlights & Ratios
PEG RatioN/A
Price to Book (P/B)N/A
Price to Sales (P/S)16.90
Price to Cash Flow (P/CF)-3.50
P/FCF Ratio0.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
OFS Capital Business Overview & Revenue Model
Company DescriptionOFS 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 MoneyOFS Capital makes money primarily through the interest income it earns on its debt investments, which include senior secured loans and subordinated loans extended to middle-market companies. The company also generates revenue from dividends and capital gains on its equity investments. Additionally, OFS benefits from fee income related to its investment activities, such as origination fees, amendment fees, and prepayment fees. These revenue streams are complemented by its strategic partnerships and relationships within the financial industry, which facilitate deal sourcing and investment opportunities.
OFS Capital Financial Statement Overview
Summary
OFS Capital faces challenges with declining revenues and negative net income, indicating profitability issues. The balance sheet shows high leverage, posing financial risks, while cash flow inconsistencies suggest liquidity management issues.Income Statement
The income statement shows a declining revenue trend with a revenue drop from $68.23M in 2021 to $41.70M in 2024. Gross profit margins are stable, but the net profit margin is concerning, with net income being negative in recent years, indicating profitability issues. The EBIT margin remains decent, reflecting operational efficiency, but the absence of EBITDA data for 2024 limits analysis.45
Neutral
Balance Sheet
The balance sheet indicates a high debt-to-equity ratio, suggesting leverage risk. However, the equity ratio remains relatively stable, indicating a balanced asset management approach. Return on equity is negative due to the net losses, highlighting profitability challenges. The large debt load is a concern for financial stability.50
Neutral
Cash Flow
Cash flow analysis reveals volatility, with free cash flow fluctuating drastically, from a negative $12.01M in 2021 to $33.01M in 2024. The operating cash flow to net income ratio is not meaningful due to negative net income in recent years. The cash flow situation suggests potential liquidity challenges and inconsistent cash generation.40
Negative
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 41.70M | 45.59M | 46.26M | 68.23M | 10.33M | Gross Profit |
| 41.70M | 31.24M | 35.77M | 54.31M | -918.00K | EBIT |
| 38.55M | 40.05M | 35.53M | 56.86M | 3.69M | EBITDA |
| 0.00 | 40.05M | 35.79M | 80.11M | 0.00 | Net Income Common Stockholders |
| 28.44M | -465.00K | -7.74M | 56.86M | 3.69M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 6.07M | 45.35M | 515.51K | 43.05M | 37.71M | Total Assets |
| 428.12M | 469.82M | 520.72M | 569.05M | 483.81M | Total Debt |
| 68.35M | 299.73M | 331.75M | 344.81M | 309.19M | Net Debt |
| 62.28M | 254.38M | 316.81M | 301.76M | 271.48M | Total Liabilities |
| 255.90M | 307.81M | 340.29M | 365.30M | 324.86M | Stockholders Equity |
| 172.22M | 162.00M | 180.42M | 203.74M | 158.96M |
| Cash Flow | Free Cash Flow | |||
| 33.01M | 81.57M | 2.95M | -12.01M | 80.63M | Operating Cash Flow |
| 33.01M | 81.57M | 2.95M | -12.01M | 80.63M | Investing Cash Flow |
| 0.00 | 0.00 | -107.55M | -216.11M | -59.63M | Financing Cash Flow |
| -72.29M | -51.15M | -31.06M | 17.35M | -56.36M |
OFS Capital Technical Analysis
Neutral
9.07
Price Trends
8.42
Positive
8.07
Positive
7.83
Positive
Market Momentum
0.26
Negative
69.43
Neutral
47.44
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OFS, the sentiment is Neutral. The current price of 9.07 is above the 20-day moving average (MA) of 9.05, above the 50-day MA of 8.42, and above the 200-day MA of 7.83, indicating a neutral trend. The MACD of 0.26 indicates Negative momentum. The RSI at 69.43 is Neutral, neither overbought nor oversold. The STOCH value of 47.44 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for OFS.
OFS Capital Risk Analysis
OFS Capital disclosed 92 risk factors in its most recent earnings report. OFS Capital 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
OFS Capital 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 | $14.73B | 8.82 | 12.40% | 8.92% | 19.95% | -10.57% | |
74 Outperform | $4.95B | 9.56 | 19.26% | 5.36% | 51.80% | 12.05% | |
67 Neutral | $3.19B | 11.45 | 13.71% | 8.68% | -1.49% | -29.48% | |
64 Neutral | $121.52M | 4.27 | 17.02% | 14.99% | -32.33% | ― | |
63 Neutral | $14.39B | 9.81 | 8.95% | 4.37% | 16.38% | -11.64% | |
58 Neutral | $667.01M | ― | -8.57% | 16.20% | 8.24% | -207.60% | |
53 Neutral | $458.38M | 28.11 | 3.28% | 13.39% | ― | -66.59% |
* Financial Sector Average
Performance Comparison
OFS
OFS Capital
9.07
0.60
7.08%
HTGC
Hercules Capital
17.19
0.49
2.93%
MAIN
Main Street Capital
51.48
7.52
17.11%
PNNT
Pennantpark Investment
6.44
0.36
5.92%
ARCC
Ares Capital
19.97
1.19
6.34%
TCPC
BlackRock TCP Capital
7.08
-1.60
-18.43%
OFS Capital Earnings Call Summary
Earnings Call Date: Mar 3, 2025 | % Change Since: 12.67% | Next Earnings Date: May 2, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance with significant increases in net investment income and net asset value per share, driven by successful equity investments and a stable loan portfolio. However, challenges such as the impact of interest rate cuts and subdued M&A activity were noted. Despite these challenges, the overall sentiment is positive due to the robust performance and strategic positioning for future growth.Highlights
Increase in Net Investment Income
Net investment income increased by approximately 13% to $0.30 per share, driven by an increase in dividend income and other nonrecurring fee income.
Significant Appreciation in Equity Investment
The fair value of the equity position in Fansteel Holdings increased by $15.6 million to $89.3 million, with total distributions received approximately 18 times the initial investment cost.
No New Non-Accruals
There were no new loans placed on non-accrual during the quarter, indicating a stable and healthy loan portfolio.
Increase in Net Asset Value per Share
Net asset value per share increased by 14% to $12.85, primarily due to appreciation in equity and structured finance positions.
High Unsecured Debt Portion
72% of outstanding debt is unsecured, providing operational flexibility.
Improvement in Investment Income Yield
The weighted average performing investment income yield improved slightly to 13.8%, up about 0.2% quarter over quarter.
Lowlights
Impact of Interest Rate Cuts
Interest income declined due to the impact of interest rate cuts on reference rates, affecting loan yields.
Subdued M&A Activity
M&A activity continues to remain muted, potentially limiting new investment opportunities.
Modest Increase in Expenses
Total expenses were up modestly by 3.5% to $7.6 million, primarily due to an increase in management and incentive fees.
Company Guidance
In the OFS Capital Corporation Q4 2024 earnings call, the company reported a 13% increase in net investment income to $0.30 per share, driven by nonrecurring dividend and fee income. The net asset value per share rose by 14% to $12.85, primarily due to the appreciation of equity and structured finance positions, notably a $15.6 million increase in the value of their investment in Fansteel Holdings. The company maintained a quarterly distribution of $0.34 per share, representing a 16.9% annualized yield. Their portfolio, valued at $409.7 million, is 100% secured with senior loans, with no new non-accruals reported. OFS Capital's debt structure includes 72% unsecured debt, and their regulatory asset coverage ratio increased to 169%. Despite a muted M&A environment, they continue to identify investment opportunities within their existing borrower base. The company's adviser manages approximately $3.9 billion across various credit markets, aligning with shareholders through a 23% ownership in the company.OFS Capital Corporate Events
Executive/Board Changes
OFS Capital Announces CFO Transition in 2025
Neutral
Jan 29, 2025
On January 28, 2025, Jeffrey A. Cerny announced his resignation as Chief Financial Officer and Treasurer of OFS Capital Corporation, effective March 31, 2025, without any disagreements related to company operations. Kyle Spina, with over 15 years of experience in accounting, will replace him as CFO and Treasurer, bringing extensive expertise from his previous roles, enhancing the company’s financial leadership.
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.