OFS Capital Corporation (OFS) and Its Peers Critical Analysis

OFS Capital Corporation (NASDAQ: OFS) is one of 573 publicly-traded companies in the “Closed End Funds” industry, but how does it compare to its rivals? We will compare OFS Capital Corporation to similar companies based on the strength of its earnings, institutional ownership, risk, dividends, profitability, analyst recommendations and valuation.

Profitability

This table compares OFS Capital Corporation and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
OFS Capital Corporation 31.02% 9.43% 4.69%
OFS Capital Corporation Competitors -40.21% 6.77% 5.35%

Institutional and Insider Ownership

28.7% of OFS Capital Corporation shares are held by institutional investors. Comparatively, 23.2% of shares of all “Closed End Funds” companies are held by institutional investors. 0.0% of OFS Capital Corporation shares are held by insiders. Comparatively, 3.5% of shares of all “Closed End Funds” companies are held by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Dividends

OFS Capital Corporation pays an annual dividend of $1.36 per share and has a dividend yield of 10.4%. OFS Capital Corporation pays out 125.9% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. As a group, “Closed End Funds” companies pay a dividend yield of 8.7% and pay out 87.0% of their earnings in the form of a dividend.

Risk & Volatility

OFS Capital Corporation has a beta of 0.48, suggesting that its share price is 52% less volatile than the S&P 500. Comparatively, OFS Capital Corporation’s rivals have a beta of 0.55, suggesting that their average share price is 45% less volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and price targets for OFS Capital Corporation and its rivals, as provided by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
OFS Capital Corporation 1 1 3 0 2.40
OFS Capital Corporation Competitors 192 1181 1412 13 2.45

OFS Capital Corporation currently has a consensus price target of $14.25, suggesting a potential upside of 8.78%. As a group, “Closed End Funds” companies have a potential upside of 39.55%. Given OFS Capital Corporation’s rivals stronger consensus rating and higher possible upside, analysts clearly believe OFS Capital Corporation has less favorable growth aspects than its rivals.

Earnings and Valuation

This table compares OFS Capital Corporation and its rivals gross revenue, earnings per share and valuation.

Gross Revenue EBITDA Price/Earnings Ratio
OFS Capital Corporation N/A N/A 12.13
OFS Capital Corporation Competitors $57.58 million $38.86 million -0.16

OFS Capital Corporation’s rivals have higher revenue and earnings than OFS Capital Corporation. OFS Capital Corporation is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Summary

OFS Capital Corporation rivals beat OFS Capital Corporation on 8 of the 13 factors compared.

About OFS Capital Corporation

OFS Capital Corporation (OFS Capital) is an externally managed, closed-end, non-diversified management investment company. The Company’s investment objective is to provide its shareholders with both current income and capital appreciation primarily through debt investments and equity investments. It focuses primarily on middle-market companies in the United States, including senior secured loans, including first-lien, second-lien and unitranche loans, as well as subordinated loans, and warrants and other minority equity securities. The Company may make investments directly or through OFS SBIC I, LP (SBIC I LP), its investment company subsidiary. It focuses on investments in loans, in which OFS Advisor’s investment professionals have expertise, including investments in first-lien, unitranche, second-lien, and mezzanine loans and, to a lesser extent, on warrants and other equity securities. The Company’s investment activities are managed by OFS Capital Management, LLC (OFS Advisor).

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