OFS Capital (NASDAQ:OFS)‘s stock had its “buy” rating reissued by equities research analysts at National Securities in a report released on Tuesday, March 13th. They presently have a $15.00 price target on the investment management company’s stock. National Securities’ price target points to a potential upside of 19.43% from the company’s current price.
The analysts wrote, “• OFS posted adjusted NII/share of $0.29 versus our estimate of $0.33 and the quarterly dividend of $0.34. The company had originations of $28.2 million on the quarter versus sales and repayments of $48.1 million and thus cash balances built up materially, causing a drag on earnings.
• Management announced on the earnings call that they expect earnings to be below the dividend in 1Q18, although we expect adjusted NII/share to improve to $0.32 from $0.29 sequentially Q/Q and then expect the dividend to be out-earned in 2Q18. Additionally, management noted that as of 3/2/18 originations QTD totaled a substantial $44.4 million and prepayments had slowed. There is usually somewhat of a quarterly lag on originations, depending on the timing of closings on new deals, and thus we expect the full interest income pull-through to occur in 2Q18.
• During 4Q17, the company realized sizable gains on both Malabar International and smarTours, LLC which induced the company to declare a $0.37/share special dividend in 1Q18. Non-accruals at cost increased Q/Q to $11.1 million or 3.8% of the portfolio from $7.6 million of 2.5% of the portfolio with the addition of Southern Technical Institute to non-accrual with a cost of $3.5 million.
• Management continues to indicate that a debt offering is in the works, and we beg management to heed our calls: please do not issue equity with low D/E like last year, let balance sheet leverage ramp, and improve ROE and thus earnings. This is what investors will likely cheer.
• We are revising our 2018 adjusted NII/share estimate to $1.35 from $1.41 and are rolling out our 2019 adjusted NII/share estimate of $1.45.”
OFS has been the topic of several other reports. ValuEngine lowered shares of OFS Capital from a “buy” rating to a “hold” rating in a research report on Thursday, November 16th. Zacks Investment Research lowered shares of OFS Capital from a “hold” rating to a “sell” rating in a research report on Wednesday, January 3rd. One analyst has rated the stock with a sell rating, one has given a hold rating and four have issued a buy rating to the company’s stock. OFS Capital currently has a consensus rating of “Buy” and an average price target of $14.67.
OFS Capital (NASDAQ:OFS) last posted its earnings results on Friday, March 2nd. The investment management company reported $0.29 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.32 by ($0.03). The firm had revenue of $8.29 million during the quarter, compared to analyst estimates of $9.02 million. OFS Capital had a net margin of 23.66% and a return on equity of 8.89%. equities analysts anticipate that OFS Capital will post 1.31 EPS for the current fiscal year.
Institutional investors have recently modified their holdings of the company. JPMorgan Chase & Co. boosted its position in shares of OFS Capital by 139.3% during the 3rd quarter. JPMorgan Chase & Co. now owns 91,112 shares of the investment management company’s stock valued at $1,190,000 after acquiring an additional 53,030 shares in the last quarter. Sigma Planning Corp acquired a new stake in shares of OFS Capital during the 4th quarter valued at about $150,000. Ladenburg Thalmann Financial Services Inc. lifted its holdings in OFS Capital by 107.7% during the 3rd quarter. Ladenburg Thalmann Financial Services Inc. now owns 38,080 shares of the investment management company’s stock valued at $501,000 after purchasing an additional 19,750 shares during the last quarter. Janney Montgomery Scott LLC lifted its holdings in OFS Capital by 8.9% during the 3rd quarter. Janney Montgomery Scott LLC now owns 141,339 shares of the investment management company’s stock valued at $1,861,000 after purchasing an additional 11,500 shares during the last quarter. Finally, Western Standard LLC lifted its holdings in OFS Capital by 2.9% during the 3rd quarter. Western Standard LLC now owns 502,174 shares of the investment management company’s stock valued at $6,614,000 after purchasing an additional 14,100 shares during the last quarter. Institutional investors and hedge funds own 26.76% of the company’s stock.
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About OFS Capital
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.
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