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Monroe Capital (MRCC)
NASDAQ:MRCC

Monroe Capital (MRCC) AI Stock Analysis

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Monroe Capital

(NASDAQ:MRCC)

Rating:69Neutral
Price Target:
Monroe Capital's overall stock score reflects a balanced view of its financial performance and valuation. Strong revenue growth and efficient cost management are offset by technical analysis indicators suggesting bearish trends. Although the company's strategic partnership with Wendel SE is a positive development, it is weighed against current challenges in NAV and yield declines. The high dividend yield adds appeal, yet it may also highlight underlying risks.

Monroe Capital (MRCC) vs. SPDR S&P 500 ETF (SPY)

Monroe Capital Business Overview & Revenue Model

Company DescriptionMonroe Capital Corporation is a business development company specializing in customized financing solutions in senior, unitranche and junior secured debt, subordinated debt financing and to a lesser extent, unsecured debt and equity, including equity co-investments in preferred and common stock and warrants. It also provides financing primarily to leveraged buyouts in lower middle-market companies. It focuses to invest in the United States and Canada. The fund prefers to invest in companies with EBITDA between $3 and $35 million. Its makes minority equity investments.
How the Company Makes MoneyMonroe Capital Corporation generates revenue primarily through interest income from its debt investments and capital gains from its equity investments. The company makes money by charging interest on the loans it provides to its portfolio companies, which can include short-term and long-term loans. Additionally, MRCC may earn fee income from origination, structuring, and commitment fees associated with its financing activities. The company also benefits from capital appreciation and dividends from its equity investments. Significant partnerships with institutional investors and banks may also play a role in MRCC's investment activities and funding capabilities, although specific partnerships are not disclosed.

Monroe Capital Earnings Call Summary

Earnings Call Date:May 07, 2025
(Q1-2025)
|
% Change Since: -4.20%|
Next Earnings Date:Aug 06, 2025
Earnings Call Sentiment Negative
The earnings call presented several challenges, such as a decrease in investment portfolio size, declining net investment income, and a drop in NAV. Despite these issues, Monroe Capital maintained a high dividend yield and reported solid portfolio management outcomes. The strategic partnership with Wendel Group is a positive note, but the financial results indicate more negative trends. The overall sentiment is cautious with significant challenges overshadowing positives.
Q1-2025 Updates
Positive Updates
Dividend Declaration and Payment
Monroe Capital Corporation declared and paid a $0.25 per share dividend in the first quarter of 2025, representing an annualized dividend yield of 14.3%.
Net Investment Income
The adjusted net investment income was $4.2 million or $0.19 per share for the first quarter of 2025.
Portfolio Management and Risk Mitigation
The portfolio reported solid revenue and EBITDA growth, with a focus on maintaining asset quality and stability. Successful exits were made from several investments previously on the credit watch list.
Strategic Partnership with Wendel Group
Monroe Capital completed its partnership with Wendel Group, a French investment company, on March 31, 2025.
Negative Updates
Decrease in Investment Portfolio
Investment portfolio decreased by $26.4 million from $457 million at the end of Q4 2024 to $430.6 million at the end of Q1 2025.
Decline in Adjusted Net Investment Income
Adjusted net investment income decreased from $6.2 million or $0.29 per share in the prior quarter to $4.2 million or $0.19 per share in Q1 2025.
NAV Decline
Net Asset Value (NAV) decreased from $191.8 million at the end of 2024 to $186.9 million at the end of Q1 2025, with NAV per share decreasing from $8.85 to $8.63.
Investment Income Decrease
Investment income fell from $14 million in Q4 2024 to $11.6 million in Q1 2025 due to lower effective yield and a decrease in average invested assets.
Portfolio Losses
Net loss on the portfolio for Q1 2025 was $3.6 million, driven by unrealized mark-to-market losses for specific legacy portfolio companies.
Company Guidance
During Monroe Capital Corporation's Q1 2025 earnings call, CEO Ted Koenig highlighted the company's financial performance and strategic positioning in a volatile market. The firm declared a $0.25 per share dividend, yielding an annualized rate of 14.3% based on the May 6, 2025 closing price, supported by accumulated spillover income of $0.53 per share. Adjusted net investment income for the quarter was $4.2 million, or $0.19 per share, with a net asset value (NAV) of $186.9 million, or $8.63 per share, and leverage at 1.45 times debt to equity. Monroe's investment portfolio stood at $430.6 million, reflecting a reduction from the previous quarter. The company emphasized asset quality, with a focus on US-centric asset-light businesses, and maintained a disciplined approach to managing income variability and investment opportunities amid evolving market conditions. Additionally, the completion of a partnership with Wendel Group was noted as a strategic move to drive shareholder value.

Monroe Capital Financial Statement Overview

Summary
Monroe Capital exhibits strong revenue growth and efficient cost management, resulting in robust profitability metrics. The recent elimination of debt improves financial stability, although past leverage levels were concerning. The company's cash flow generation is consistent, supporting ongoing operations. Overall, Monroe Capital presents a stable financial outlook with opportunities for continued growth, but past volatility in net income and leverage warrants attention.
Income Statement
75
Positive
Monroe Capital's revenue exhibited strong growth with a significant increase from the previous year, indicating robust top-line performance. The gross profit margin is favorable, reflecting efficient cost management. However, net income shows volatility, impacting net profit margins. The EBIT margin remains stable, but EBITDA data is missing, limiting full profitability analysis.
Balance Sheet
72
Positive
The balance sheet reveals a stable equity position with a healthy equity ratio, suggesting strong asset backing. The elimination of total debt in the latest report significantly reduces leverage risk, enhancing financial stability. However, the company previously carried high debt levels, indicating past leverage concerns.
Cash Flow
68
Positive
Operating cash flow is positive and stable, supporting Monroe Capital's liquidity position. Although the free cash flow growth rate is not available, the consistent positive free cash flow indicates effective cash management. The operating cash flow to net income ratio is favorable, suggesting efficient conversion of profits into cash.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
37.27M14.59M27.28M4.49M40.16M6.51M
Gross Profit
28.10M14.59M11.93M-9.27M27.08M-4.17M
EBIT
17.56M10.16M24.16M13.57M32.74M2.02M
EBITDA
8.88M10.16M0.0088.16M0.000.00
Net Income Common Stockholders
10.60M9.70M371.00K-2.79M32.46M1.65M
Balance SheetCash, Cash Equivalents and Short-Term Investments
6.46M9.04M4.96M5.45M2.62M6.77M
Total Assets
461.52M490.67M513.19M565.00M590.46M585.12M
Total Debt
0.00291.98M300.87M330.11M332.15M343.51M
Net Debt
-6.46M282.93M295.91M324.66M329.53M336.74M
Total Liabilities
274.64M298.91M309.46M339.98M340.99M350.69M
Stockholders Equity
186.88M191.76M203.72M225.02M249.47M234.43M
Cash FlowFree Cash Flow
60.10M35.96M51.73M14.11M20.01M74.93M
Operating Cash Flow
60.10M35.96M51.73M14.11M20.01M74.93M
Investing Cash Flow
39.78M0.000.003.63M7.54M51.20M
Financing Cash Flow
-72.70M-31.87M-52.22M-26.72M-34.30M-72.15M

Monroe Capital Technical Analysis

Technical Analysis Sentiment
Negative
Last Price6.38
Price Trends
50DMA
6.46
Negative
100DMA
7.10
Negative
200DMA
7.28
Negative
Market Momentum
MACD
<0.01
Negative
RSI
51.35
Neutral
STOCH
23.36
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MRCC, the sentiment is Negative. The current price of 6.38 is above the 20-day moving average (MA) of 6.25, below the 50-day MA of 6.46, and below the 200-day MA of 7.28, indicating a neutral trend. The MACD of <0.01 indicates Negative momentum. The RSI at 51.35 is Neutral, neither overbought nor oversold. The STOCH value of 23.36 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MRCC.

Monroe Capital Risk Analysis

Monroe Capital disclosed 5 risk factors in its most recent earnings report. Monroe 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

Monroe Capital Peers Comparison

Overall Rating
UnderperformOutperform
Sector (64)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
OFOFS
70
Outperform
$120.18M3.9819.56%15.04%-49.04%
69
Neutral
$138.23M19.633.63%15.67%127.09%2519.30%
64
Neutral
$12.73B9.777.84%78.17%12.05%-7.99%
51
Neutral
$158.45M569.23-0.32%18.92%-338.17%-97.99%
48
Neutral
$106.02M41.01-5.47%16.15%-37.27%-153.39%
48
Neutral
$119.02M24.983.56%14.35%32.38%-90.38%
45
Neutral
$173.11M-9.96%90.08%-893.47%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MRCC
Monroe Capital
6.38
-0.03
-0.47%
PTMN
Portman Ridge Finance
12.43
-4.30
-25.70%
SSSS
SuRo Capital
7.42
3.37
83.21%
OXSQ
Oxford Square Capital
2.22
-0.32
-12.60%
OFS
OFS Capital
9.10
0.68
8.08%
GECC
Great Elm Capital
10.59
1.82
20.75%

Monroe Capital Corporate Events

Financial Disclosures
Monroe Capital to Announce Q1 2025 Financial Results
Neutral
Apr 18, 2025

On April 18, 2025, Monroe Capital Corporation announced it will release its financial results for the first quarter ended March 31, 2025, on May 7, 2025, after the market closes. The company will hold a webcast and conference call on May 8, 2025, to discuss these results, indicating a proactive approach to engaging with stakeholders and potentially impacting investor sentiment and market positioning.

Spark’s Take on MRCC Stock

According to Spark, TipRanks’ AI Analyst, MRCC is a Neutral.

Monroe Capital’s overall stock score reflects a stable financial performance with strong revenue growth and efficient cost management. The recent strategic partnership with Wendel Group offers growth potential. However, technical analysis indicates potential downward trends, and the earnings call revealed some challenges such as declining NAV and increased non-accrual loans. Despite these issues, the high dividend yield and fair valuation offer attractive opportunities for investors.

To see Spark’s full report on MRCC stock, click here.

Private Placements and FinancingM&A TransactionsBusiness Operations and Strategy
Monroe Capital Forms Strategic Partnership with Wendel SE
Positive
Mar 31, 2025

On March 31, 2025, Monroe Capital Corporation entered into a new investment advisory agreement with Monroe Capital BDC Advisors, LLC, following the termination of the previous agreement due to a change of control. This change was part of a strategic partnership where Momentum US Bidco LLC, an affiliate of Wendel SE, acquired a 75% stake in Monroe’s affiliates. The partnership aims to support Monroe’s growth initiatives and expand its U.S. private credit platform, with Wendel committing $1 billion for seed capital and GP commitments. Monroe will continue to operate independently with no changes to its investment process or operations.

Financial Disclosures
Monroe Capital to Announce 2024 Financial Results
Neutral
Feb 21, 2025

On February 21, 2025, Monroe Capital Corporation announced that it will release its fourth quarter and full year 2024 financial results on February 28, 2025, after market close. The company will also host a webcast and conference call on March 3, 2025, to discuss these results, highlighting its continued focus on engaging with stakeholders and providing transparency in its financial performance.

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.