OFS Capital (OFS) AI Stock Analysis

• Market Cap: $66.19M
• Dividend Yield: 25.87%
• Average Volume (3M): 94.27K
• Price to Earnings (P/E): 20.7
• Beta (1Y): 0.30
• Revenue Growth: -14.76%
• EPS Growth: N/A
• Country: US
• Employees: 53
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.22
• Shares Outstanding: 13,398,078
• 10 Day Avg. Volume: 70,150
• 30 Day Avg. Volume: 94,274
• PEG Ratio: >-0.01
• Price to Book (P/B): 0.63
• Price to Sales (P/S): 2.25
• P/FCF Ratio: 3.28
• Enterprise Value/Market Cap: 5.05
• Enterprise Value/Revenue: 8.72
• Enterprise Value/Gross Profit: 41.69
• Enterprise Value/Ebitda: 103.44
• 1Y Price Target: $7.00
• Price Target Upside: 1.89% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): 1
• Revenue Forecast (FY): $42.02M

• Rating: 54 Neutral
• Price Target: $5.00 ▼(-27.22% Downside)

OFS scores in the mid-range primarily due to mixed financial performance: improved leverage and ongoing profitability are offset by revenue contraction, weak cash-flow conversion, and historical earnings volatility. Technical signals remain soft (below key longer-term moving averages with negative MACD), while valuation benefits from a very high dividend yield but with added sustainability risk given the recent distribution cut. Earnings call and recent corporate actions modestly support the score through refinancing and extended maturities, but NAV and income pressure remain notable.

Positive Factors

Improved leverage

A materially lower debt-to-equity ratio meaningfully reduces financial risk and interest burden for a BDC. This stronger capital structure increases flexibility to deploy new investments, absorb credit volatility, and sustain distributions or opportunistic buybacks over the coming quarters.

Extended credit facility maturity

Extending the revolver maturity lengthens financing runway and reduces near-term refinancing risk. Greater liquidity visibility supports steadier investment activity, reduces rollover pressure on assets, and complements recent note redemptions to simplify the company’s debt maturity profile.

Senior‑secured, floating‑rate portfolio mix

A portfolio concentrated in senior‑secured and predominantly floating‑rate loans strengthens downside protection and preserves yield when rates move. Diversification away from highly cyclical sectors reduces volatility in recoveries and supports steadier interest income over multiple quarters.

Negative Factors

Revenue decline and earnings volatility

Declining revenue and historically erratic earnings reduce the predictability of interest income, which is the firm’s main revenue source. For a BDC, a shrinking interest base and volatile earnings complicate dividend planning and increase the chance of further NAV pressure during economic stress.

Weak cash‑flow conversion

Poor cash conversion means reported net income is less supported by actual cash, limiting the firm's ability to fund distributions, pay down liabilities, or reinvest. Persistent weak/volatile cash flows elevate funding risk and constrain strategic flexibility across the next several quarters.

NAV markdowns, distribution cut and margin pressure

Material markdowns and a distribution reduction signal pressure on capital and recurring income generation. Combined with margin compression from higher funding costs and anticipated rate shifts, these trends can persistently constrain NAV recovery and limit distributable earnings over the medium term.

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 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 demonstrates strong profitability and efficient management with high margins and good equity returns. However, declining revenue and free cash flow raise concerns about future growth prospects. The balance sheet reflects prudent financial management with moderate leverage, although asset decline is a potential risk. Overall, the company is financially stable but must address revenue and cash flow challenges to sustain long-term growth.

Income Statement

The TTM (Trailing-Twelve-Months) data shows a strong gross profit margin of 87.16% and a solid net profit margin of 87.54%, indicating efficient cost management and profitability. However, the revenue growth rate is negative, suggesting declining sales compared to previous years. The EBIT margin is robust at 101.10%, reflecting effective operational control. Overall, while profitability metrics are strong, declining revenue is a concern.

Balance Sheet

The company's debt-to-equity ratio is 0.42, which is relatively low and indicates moderate leverage. Return on Equity (ROE) is high at 23.37%, showing effective use of shareholders' equity to generate profit. The equity ratio of 38.93% suggests a healthy proportion of equity financing. The balance sheet is stable with good profitability and manageable debt levels, though a decrease in total assets over time could be a risk.

Cash Flow

The free cash flow growth rate is negative, indicating a decline in free cash flow from previous periods. Operating cash flow to net income ratio is 0.63, which suggests that operating cash flow is lower than net income, potentially indicating issues with cash conversion. Free cash flow to net income ratio is 0.63 as well, highlighting the need for improved cash flow management. Cash flow is stable but shows signs of potential strain.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	38.32M	47.96M	56.94M	12.70M	85.75M	29.14M
Gross Profit	8.01M	32.88M	4.79M	-4.33M	68.23M	10.33M
EBITDA	3.23M	28.51M	-57.00K	-7.18M	57.09M	3.90M
Net Income	3.23M	28.44M	-465.00K	-7.59M	56.86M	3.69M
Balance Sheet
Total Assets	378.15M	428.12M	469.82M	520.72M	569.05M	483.81M
Cash, Cash Equivalents and Short-Term Investments	5.01M	6.07M	45.35M	14.94M	43.05M	37.71M
Total Debt	59.20M	246.66M	299.73M	331.75M	344.81M	309.19M
Total Liabilities	241.84M	255.90M	307.81M	340.29M	365.30M	324.86M
Stockholders Equity	136.31M	172.22M	162.00M	180.42M	203.74M	158.96M
Cash Flow
Free Cash Flow	4.83M	33.01M	21.37M	2.95M	-12.01M	80.63M
Operating Cash Flow	4.83M	33.01M	21.37M	2.95M	-12.01M	80.63M
Investing Cash Flow	10.53M	0.00	60.20M	-107.55M	-216.11M	-59.63M
Financing Cash Flow	-30.63M	-72.29M	-51.15M	-31.06M	17.35M	-56.36M

OFS Capital Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 6.87
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

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 6.87 is above the 20-day moving average (MA) of 4.81, above the 50-day MA of 4.99, and below the 200-day MA of 7.02, indicating a neutral trend. The MACD of -0.06 indicates Negative momentum. The RSI at 54.56 is Neutral, neither overbought nor oversold. The STOCH value of 90.08 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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%
MRCC	64 Neutral	$133.68M	-32.47	-2.25%	14.03%	-34.92%	-132.22%
WHF	61 Neutral	$160.14M	16.48	3.51%	21.24%	-55.82%	-4.97%
SCM	60 Neutral	$367.92M	12.02	8.20%	12.83%	90.34%	-44.25%
OFS	54 Neutral	$66.19M	20.66	2.25%	25.87%	-14.76%	―
OXSQ	48 Neutral	$145.37M	-49.72	-1.61%	24.14%	-177.91%	55.08%
GECC	45 Neutral	$95.89M	-12.61	-5.98%	22.43%	47.01%	-179.46%

OFS Capital Corporate Events

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.

OFS Capital Announces Partial Redemption of 2026 Notes

On November 28, 2025, OFS Capital Corporation announced its decision to partially redeem its 4.75% Notes due 2026. The company will redeem $15,000,000 of the $31,000,000 outstanding notes on December 30, 2025, at a redemption price equal to 100% of the principal amount plus any accrued interest. This move is part of the company’s financial strategy, potentially impacting its debt structure and providing clarity to stakeholders about its financial commitments.

The most recent analyst rating on (OFS) stock is a Hold with a $7.00 price target. To see the full list of analyst forecasts on OFS Capital stock, see the OFS Stock Forecast page.

OFS Capital Amends Credit Agreement with BNP Paribas

On November 20, 2025, OFSCC-FS, LLC, a subsidiary of OFS Capital Corporation, amended its revolving credit and security agreement with BNP Paribas and other parties. The amendment allows for adjustments in portfolio advance rates based on diversity scores and permits the purchase and contribution of additional collateral loans, potentially enhancing the company’s financial flexibility and operational capacity.

The most recent analyst rating on (OFS) stock is a Hold with a $7.00 price target. To see the full list of analyst forecasts on OFS Capital stock, see the OFS Stock Forecast page.