OFS Capital (OFS) AI Stock Analysis

• Market Cap: $117.37M
• Dividend Yield: 15.53%
• Average Volume (3M): 56.60K
• Price to Earnings (P/E): 4.1
• Beta (1Y): 0.29
• Revenue Growth: -32.33%
• EPS Growth: N/A
• Country: US
• Employees: 53
• Sector: Financial
• Sector Strength: 88
• Industry: Asset Management
• EPS (TTM): 2.12
• Shares Outstanding: 13,398,078
• 10 Day Avg. Volume: 38,583
• 30 Day Avg. Volume: 56,600
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 2.97
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 10.61
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0

OFS Capital's overall stock score of 57 reflects significant financial performance challenges, including declining revenues and high leverage. While the technical analysis shows stable price momentum, and the valuation is attractive with a low P/E and high dividend yield, these positives are counterbalanced by concerns from the recent earnings call regarding declining net investment income and economic uncertainties. The company must address its financial and operational challenges to improve its stock performance.

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 faces challenges in revenue growth and profitability, with declining revenues and negative net income. The balance sheet shows high leverage, posing financial risks, while cash flow inconsistencies suggest liquidity management issues. Overall, the company needs to address these financial challenges to ensure sustainable growth and stability.

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.

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.

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.

Breakdown
Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
32.88M	45.59M	46.26M	68.23M	10.33M
	Gross Profit
32.88M	31.24M	35.77M	54.31M	-918.00K
	EBIT
28.44M	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

• Technical Analysis Sentiment: Positive
• Last Price: 8.76
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OFS, the sentiment is Positive. The current price of 8.76 is above the 20-day moving average (MA) of 8.52, above the 50-day MA of 8.67, and above the 200-day MA of 7.88, indicating a bullish trend. The MACD of 0.05 indicates Negative momentum. The RSI at 52.58 is Neutral, neither overbought nor oversold. The STOCH value of 52.59 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OFS.

OFS Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
OFS	70 Outperform	$117.37M	4.13	19.56%	15.53%	-32.33%	―
MRCC	69 Neutral	$152.10M	15.67	4.91%	14.24%	127.09%	2519.30%
Sector *	64 Neutral	$12.64B	9.74	8.05%	17044.60%	12.66%	-4.62%
OXSQ	51 Neutral	$179.86M	646.15	-0.32%	16.67%	-338.17%	-97.99%
PTMN	48 Neutral	$112.49M	41.01	-3.03%	20.77%	-37.27%	-153.39%
GECC	48 Neutral	$116.51M	27.96	3.03%	14.07%	32.38%	-90.38%
SSSS	45 Neutral	$114.46M	―	-21.13%	―	90.08%	-893.47%

OFS Capital Corporate Events

OFS Capital Announces CFO Transition in 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.