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OFS Capital
(NASDAQ:OFS)
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Rating:55Neutral
Price Target:
$4.00
▲(9.59% Upside)
Action:Reiterated
Date:08/28/26
OFS scores slightly above neutral primarily because recent profitability has deteriorated sharply and leverage remains elevated, even as strong current cash generation provides support. Technicals are moderately positive but not yet a clear long-term uptrend, while valuation is buoyed by an extremely high dividend yield that is tempered by loss-making earnings and income sustainability risks. The earnings call and recent events show improving balance-sheet positioning, but weaker NII trends and new credit/nonaccrual and CLO valuation pressures cap the overall score.
Positive Factors
Senior-secured portfolio protection
The predominance of first-lien and senior-secured loans provides stronger recovery prospects than unsecured lending. This structure can help protect capital and support recurring income through credit cycles, while exposure across 51 issuers limits reliance on one borrower.
Negative Factors
Severe profitability and revenue deterioration
The sharp decline in revenue and shift to losses indicate that current earnings power is unstable. For a credit-focused investment company, weaker profitability can reduce retained capital, constrain distributions and make it harder to absorb portfolio markdowns or credit losses.
Read all positive and negative factors
Positive Factors
Negative Factors
Senior-secured portfolio protection
The predominance of first-lien and senior-secured loans provides stronger recovery prospects than unsecured lending. This structure can help protect capital and support recurring income through credit cycles, while exposure across 51 issuers limits reliance on one borrower.
Read all positive factors
OFS Capital (OFS) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$52.39M
Dividend Yield21.63%
Average Volume (3M)55.23K
Price to Earnings (P/E)―
Beta (1Y)0.71
Revenue Growth-43.53%
EPS Growth-316.63%
CountryUS
Employees47
SectorFinancial
Sector Strength70
IndustryAsset Management
Share Statistics
EPS (TTM)-1.65
Shares Outstanding13,398,078
10 Day Avg. Volume61,036
30 Day Avg. Volume55,225
Financial Highlights & Ratios
PEG Ratio<0.01
Price to Book (P/B)0.52
Price to Sales (P/S)-5.40
P/FCF Ratio1.46
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue>-0.01
Enterprise Value/Gross Profit>-0.01
Enterprise Value/Ebitda>-0.01
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)0.6
Revenue Forecast (FY)$32.27M
OFS Capital Business Overview & Revenue Model
Company Description
OFS Capital Corporation functions as a business development company, delivering adaptable capital solutions, predominantly through debt financing and, to a lesser degree, minority equity investments. The firm concentrates on U.S.-based middle-mark...
How the Company Makes Money
OFS Capital makes money primarily from investment income generated by its portfolio. The core revenue stream is interest income earned on debt investments (most notably senior secured loans) made to portfolio companies; this includes contractual c...
OFS Capital Earnings Call Summary
Earnings Call Date:Jul 30, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Oct 29, 2026
Earnings Call Sentiment Neutral
The call reflected a balanced outlook: meaningful balance sheet progress (deleveraging, extended maturities, higher regulatory coverage ratio) and NAV gains driven by Fansteel contrast with a sizable quarter-over-quarter decline in net investment income, CLO-related mark-to-market losses, a new nonaccrual loan, and compression in yields. Management emphasized readiness to prudently redeploy capital to improve NII while retaining disciplined underwriting.Positive Updates
NAV Increase Driven by Fansteel
Net asset value per share rose to $8.41 from $8.16, an increase of $0.25 or approximately 3% quarter-over-quarter, largely driven by $14.1 million of unrealized appreciation on the company's equity investment in Fansteel (fair value $94.6 million, ~32% of portfolio).
Negative Updates
Material Decline in Net Investment Income
Net investment income fell to $0.08 per share in Q2 2026 from $0.18 in Q1 2026, a decline of $0.10 per share or ~55.6% quarter-over-quarter (NII of $1.0 million), driven by the roll-off of a prior nonrecurring Fansteel dividend and deleveraging impacts.
Read all updates
Q2-2026 Updates
Positive
Negative
NAV Increase Driven by Fansteel
Net asset value per share rose to $8.41 from $8.16, an increase of $0.25 or approximately 3% quarter-over-quarter, largely driven by $14.1 million of unrealized appreciation on the company's equity investment in Fansteel (fair value $94.6 million, ~32% of portfolio).
Read all positive updates
Company Guidance
The company guided that it will maintain the Q3 quarterly distribution at $0.17 per share (a 19.2% annualized yield on the current market price) while shifting from balance‑sheet repair to prudently redeploying capital to boost net investment income (NII); Q2 NII was $1.0 million or $0.08 per share (down from $0.18/sh in Q1), NAV rose to $8.41/sh (up $0.25 or ~3% q/q from $8.16), and regulatory asset coverage improved to 161% (up 7 pts). Management highlighted progress on deleveraging—$57.6 million of total debt reduction over the last 12 months and $16.7 million of repayments in the quarter, with maturities now spanning 2028–2031—and noted $6.0 million of unfunded commitments to portfolio companies. They reiterated plans to pursue monetization of Fansteel (fair value $94.6M, ~32% of the portfolio, $14.1M of unrealized appreciation this quarter, $5.1M of distributions to date on a $200k cost ≈23x return) while managing portfolio risk (51 issuers, $297.8M fair value; ~66% senior secured loans/22% structured finance/12% equity by amortized cost; 97% of loans first‑lien by fair value), and said they expect to selectively deploy into income‑generating opportunities to lift yields after a quarter in which total investment income fell ~23% to $6.8M, expenses fell ~9% to $5.8M, weighted average performing investment income yield declined 0.4 pp to 12.1%, and CLO equity valuations incurred $6.5M of losses.OFS Capital Financial Statement Overview
Summary
Income Statement
18
Very Negative
Balance Sheet
44
Neutral
Cash Flow
63
Positive
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | -6.31M | -11.81M | 49.52M | 24.27M | 12.70M | 85.75M |
| Gross Profit | -18.58M | -28.32M | 32.88M | 4.79M | -4.33M | 68.23M |
| EBITDA | -14.23M | -33.09M | 28.51M | -57.00K | -7.18M | 57.09M |
| Net Income | -22.20M | -33.09M | 28.44M | -465.00K | -7.59M | 56.86M |
Balance Sheet | ||||||
| Total Assets | 304.46M | 346.71M | 428.12M | 469.82M | 520.72M | 569.05M |
| Cash, Cash Equivalents and Short-Term Investments | 3.98M | 3.36M | 6.07M | 45.35M | 14.94M | 43.05M |
| Total Debt | 183.49M | 217.64M | 246.66M | 299.73M | 331.75M | 344.81M |
| Total Liabilities | 191.85M | 223.52M | 255.90M | 307.81M | 340.29M | 365.30M |
| Stockholders Equity | 112.61M | 123.19M | 172.22M | 162.00M | 180.42M | 203.74M |
Cash Flow | ||||||
| Free Cash Flow | 64.55M | 43.64M | 33.01M | 21.37M | 2.95M | -12.01M |
| Operating Cash Flow | 64.55M | 43.64M | 33.01M | 21.37M | 2.95M | -12.01M |
| Investing Cash Flow | 26.26M | 0.00 | 0.00 | 60.20M | -107.55M | -216.11M |
| Financing Cash Flow | -70.81M | -46.35M | -72.29M | -51.15M | -31.06M | 17.35M |
OFS Capital Technical Analysis
Positive
3.65
Price Trends
3.62
Positive
3.57
Positive
3.75
Positive
Market Momentum
0.09
Negative
63.23
Neutral
88.15
Negative
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 3.65 is below the 20-day moving average (MA) of 3.69, above the 50-day MA of 3.62, and below the 200-day MA of 3.75, indicating a bullish trend. The MACD of 0.09 indicates Negative momentum. The RSI at 63.23 is Neutral, neither overbought nor oversold. The STOCH value of 88.15 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for OFS.
OFS Capital Risk Analysis
OFS Capital disclosed 99 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
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $152.48M | 8.97 | 6.83% | 16.76% | -0.46% | 416.27% | |
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
64 Neutral | $250.05M | 8.18 | 8.05% | 16.42% | 0.37% | -28.29% | |
55 Neutral | $52.39M | -2.38 | -18.44% | 21.63% | -43.53% | -316.63% | |
54 Neutral | $83.34M | -1.87 | -32.53% | 21.46% | -11.06% | -288.02% | |
51 Neutral | $145.41M | -2.98 | -25.97% | 31.58% | ― | -1756.77% |
* Financial Sector Average
OFS
OFS Capital
3.93
-3.29
-45.61%
OXSQ
Oxford Square Capital
1.33
-0.40
-23.03%
WHF
WhiteHorse
7.04
-0.43
-5.81%
SCM
Stellus Capital
8.40
-4.54
-35.09%
GECC
Great Elm Capital
6.01
-3.38
-35.99%
OFS Capital Corporate Events
Business Operations and StrategyPrivate Placements and Financing
OFS Capital Announces Partial Redemption of 7.50% Notes
Positive
Aug 28, 2026
On August 28, 2026, OFS Capital Corporation announced it had notified holders of its 7.50% Notes due 2028 that it would exercise its option to redeem a portion of the issue. The move affects $20 million of the $69 million outstanding, and the comp...
Business Operations and StrategyShareholder Meetings
OFS Capital Special Meeting Adjourned Without Shareholder Vote
Negative
Aug 11, 2026
On April 2, 2026, OFS Capital Corporation called a special meeting of stockholders to consider authorizing the company, with board approval, to issue common stock over the following 12 months at prices below its then-current net asset value per sh...
Executive/Board ChangesShareholder Meetings
OFS Capital Stockholders Approve Directors and Auditor Slate
Positive
Jun 10, 2026
On June 10, 2026, OFS Capital Corporation held its 2026 annual meeting of stockholders, with 8,728,411 shares represented in person or by proxy out of 13,398,078 eligible to vote. Stockholders elected Romita Shetty and Bilal Rashid as Class II dir...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.