OFS Capital Corporation 7.50% Notes due 2028 (OFSSO)

FairStock Score: 42/100 — MIXED

Key Financials

AI Analysis

AI-generated, general educational analysis — not personal investment advice.

Seeking a margin of safety in a BDC note means looking first at credit, not yield. OFS Capital lends to middle-market U.S. companies, and its earnings record is volatile. In fiscal 2024, the year ended 2024-12-31, it reported net income of $28.4M and diluted EPS of $2.12. Then in fiscal 2025, the year ended 2025-12-31, net income was -$33.1M and diluted EPS was -$2.47. That is a violent reversal. Fiscal Q1 2026, the quarter ended 2026-03-31, showed a net loss of -$11.6M and EPS of -$0.86, but fiscal Q2 2026, the quarter ended 2026-06-30, produced net income of $5.6M and EPS of $0.42. One good quarter does not erase a full-year loss. FairStock calculates ROE of -17.15%, ROCE of 4.49%, and debt-to-equity of 1.63, so returns are poor and leverage is meaningful. The P/B of 3.03 and FairStock Score of 42/100 suggest the market is not paying for a high-quality compounder. Peter Lynch's computed category is TURNAROUND, based on a loss in the latest year after earlier profits. For the 7.50% Notes due 2028, the price is $25.49 as of 2026-10-13, within a 52-week range of $24.99–$28.14. That is not a distressed price, so the coupon may not fully compensate for credit risk if losses persist. I see no durable moat; lending is competitive and cyclical. The key is whether Q2 2026's profit becomes a trend and whether leverage and asset quality stabilize. Until then, this is a speculation on repair, not a safe income stream.

In plain English: This is a bond-like note from OFS Capital, a company that lends money to middle-sized U.S. businesses. The company's profits have been uneven: it lost $33.1 million in fiscal 2025, though it earned $5.6 million in the quarter ended June 30, 2026. The note trades at $25.49, near the low end of its 52-week range, so the price looks fair rather than clearly cheap or expensive, but the business looks weak.

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Data as of 2026-10-13 close · note generated 2026-10-15 · model deepseek-flash

Sources (SEC EDGAR): fiscal Q2 2026 10-Q (period ended 2026-06-30) · fiscal Q1 2026 10-Q (period ended 2026-03-31) · fiscal Q3 2025 10-Q (period ended 2025-09-30) · fiscal Q2 2025 10-Q (period ended 2025-06-30) · FY2025 10-K (period ended 2025-12-31) · FY2024 10-K (period ended 2024-12-31) · FY2023 10-K (period ended 2023-12-31)

Fundamentals from company filings and market-data providers; prices are end-of-day, not real-time. AI-generated analysis is general and educational — not personal investment advice. Scoring methodology · Score test · Disclaimer