Dividend Investing, Growth At A Reasonable Price
Contributor Since 2011
OFS Capital Reports Adjusted NII of $0.2848 compared to a Dividend of $0.34 Business Wire 05-08-15
OFS Capital reported Total investment income of $7.621 million or $0.7897/share. Net investment income was $2.749 million or $0.2848/share while adjusted NII was $0.29/share. The Net increase in net assets resulting from operations was $3.232 million or $0.3349/share. Net asset value was $14.24 compared to $14.24 last quarter.
|Total investment income||7.621||6.953||6.197||4.658||5.012||4.452||4.017||4.236||4.365|
|Net investment income||2.749||2.743||2.893||2.009||1.400||1.382||1.428||1.466||1.442|
|Investments @ fair value||0.316||0.312||0.266||0.231||0.228||0.238||0.220||0.242||0.229|
|Wt Av Share Count||9.651||9.639||9.638||9.632||9.631||9.629||9.601||9.621||9.601|
|Wt Av Yield||10.24%||9.56%||9.09%||8.08%||8.35%||8.53%||7.21%||7.23%||7.43%|
|Adjusted NII represents NII excluding write-offs of deferred financing costs associated with the credit facility|
NII of $0.2848 was below analyst consensus projections
|Earnings Est||Current Qtr.
|No. of Analysts||4.00||4.00||4.00||3.00|
|Year Ago EPS||0.15||0.22||0.99||1.29|
TII of $7.621 million was above analyst consensus projections
|Revenue Est||Current Qtr.
|No. of Analysts||4||4||4||3|
OFS closed yesterday at a yield of 11.18% and a price to NAV ratio of 0.85. It is slightly down this morning - probably due to the small earnings miss.
While the portfolio is small, it does have granularity. The OFS portfolio was $316.2 million - with outstanding loans of approximately $302.4 million in 58 portfolio companies. A portfolio with a weighted average yield of 10.24% is slightly below sector average in risk.
So why does OFS merit a yield that is so high? It lacks dividend coverage. That scares me - and it should scare you. The analyst are projecting enough NII growth that OFS should arrive at coverage next year. I would like to see more NII/share growth before I accept that projection. NII growth has been great. But the gap between NII and the coverage needed is also a bit large.
Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.