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SLR Investment Corp. (SLRC)
NASDAQ:SLRC
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SLR Investment Corp.
(NASDAQ:SLRC)
74Outperform
Positive Factors
Earnings
SLRC's net investment income over-covered the dividend, indicating strong financial performance and stability.
Growth Prospects
SLRC has a significant pipeline of opportunities and is well-positioned with low leverage, allowing it to take advantage of growth prospects.
Investment Potential
SLRC's shares are expected to appreciate in value, with a price target aligned with high-quality BDC valuations, offering an attractive total return potential.
Negative Factors
Investment Performance
SLR Equipment Finance also grew materially, though still running at a loss.
Management Outlook
Management sees less opportunity to rebuild the book in the near term.
Origination Activity
On-balance sheet origination was light this quarter, with one new name, and management noted that a muted pace of origination in this vertical could continue for at least another couple of quarters.
SLR Investment Corp. (SLRC) vs. S&P 500 (SPY)
Market Cap
$810.14M
Dividend Yield10.84%
Average Volume (3M)246.99K
Price to Earnings (P/E)8.5
Beta (1Y)0.57
Revenue Growth14.33%
EPS Growth25.35%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength85
IndustryAsset Management
Share Statistics
EPS (TTM)1.75
Shares Outstanding54,554,634
10 Day Avg. Volume349,882
30 Day Avg. Volume246,991
Financial Highlights & Ratios
PEG Ratio0.33
Price to Book (P/B)N/A
Price to Sales (P/S)5.78
Price to Cash Flow (P/CF)1.40
P/FCF Ratio1.30
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$16.55Price Target Upside9.31% Upside
Rating ConsensusHold
Number of Analyst Covering5
SLR Investment Corp. Business Overview & Revenue Model
Company DescriptionSLR Investment Corp. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, leveraged buyouts, acquisitions, recapitalizations, general refinancing, growth capital and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate activities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non-precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities. It also invests in life sciences with focus on specialty pharmaceuticals, medical devices, biotech, health Care Providers and services; health Care technology, enabling technologies and tools. The fund primarily invests in United States. The fund's investments generally range between $5 million and $100 million. The fund invests in companies with revenues between $50 million and $1 billion and EBITDA between $15 million and $100 million. It invests in the form of senior secured loans, mezzanine loans, and equity securities. It may also seek investments in thinly traded public companies and also make secondary investments. The fund makes non-control equity investments. It primarily exits within three years of the initial capital commitment.
How the Company Makes MoneySLR Investment Corp. makes money primarily through interest and fee income generated from its lending activities. By extending senior and junior secured loans to middle-market companies, SLRC earns interest payments that form a significant portion of its revenue. Additionally, the company may generate income through equity investments, where it takes ownership stakes in companies and benefits from capital appreciation and dividends. SLRC's earnings are also influenced by strategic partnerships with financial institutions, which may provide co-investment opportunities and enhance its investment capabilities. The company's performance is closely tied to the credit quality of its portfolio and the broader economic environment, as these factors impact the repayment capacity of its borrowers.
SLR Investment Corp. Financial Statement Overview
Summary
SLR Investment Corp. exhibits strong revenue growth and improved EBIT margins, reflecting effective cost management. The balance sheet is robust with strong equity and no debt, minimizing financial risk. However, cash flow volatility poses concerns, and the absence of net income data limits profitability assessment.Income Statement
SLR Investment Corp. shows a strong revenue growth trajectory, with a significant increase from $28.32M in 2022 to $232.43M in 2024. The EBIT margin improved considerably from 26.43% in 2021 to 98.34% in 2024, indicating efficient cost management. However, the net income for 2024 is not reported, which limits a comprehensive profitability analysis.75
Positive
Balance Sheet
The company maintains a strong equity position, with a consistent stockholders' equity over the years, peaking at $992.93M in 2024. The equity ratio remained stable, reflecting financial stability. The debt-to-equity ratio was zero in 2024, showing no reliance on debt, but the absence of total debt might suggest underutilization of leverage.70
Positive
Cash Flow
SLR Investment Corp. demonstrated a positive shift in operating cash flow from -$76.88M in 2023 to $309.32M in 2024, indicating improved cash generation capabilities. Free cash flow also turned positive, supporting potential reinvestment and shareholder returns. However, the volatility in cash flows over the years suggests potential instability in cash management.65
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 232.43M | 201.33M | 28.32M | 69.53M | 23.60M | Gross Profit |
| 232.43M | 141.37M | 22.91M | 25.37M | -8.84M | EBIT |
| 228.57M | 148.90M | 74.84M | 59.57M | 15.45M | EBITDA |
| 0.00 | 148.90M | 64.43M | 89.44M | 42.61M | Net Income Common Stockholders |
| 95.76M | 76.39M | 65.96M | 59.57M | 15.45M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 16.76M | 344.15M | 19.11M | 322.94M | 388.78M | Total Assets |
| 2.45B | 2.52B | 2.54B | 2.01B | 1.94B | Total Debt |
| 0.00 | 1.18B | 1.09B | 812.04M | 671.45M | Net Debt |
| -16.76M | -344.15M | 657.66M | 489.10M | 282.68M | Total Liabilities |
| 1.46B | 1.54B | 1.54B | 1.17B | 1.08B | Stockholders Equity |
| 992.93M | 986.64M | 999.73M | 842.28M | 852.02M |
| Cash Flow | Free Cash Flow | |||
| 309.31M | -76.88M | 91.06M | -135.10M | -62.60M | Operating Cash Flow |
| 309.31M | -76.88M | 91.06M | -135.10M | -62.60M | Investing Cash Flow |
| 0.00 | -61.24M | -78.26M | -127.72M | -43.68M | Financing Cash Flow |
| -239.20M | -7.30M | 14.34M | 69.26M | 15.03M |
SLR Investment Corp. Technical Analysis
Negative
15.14
Price Trends
16.58
Negative
16.28
Negative
15.42
Negative
Market Momentum
-0.56
Positive
39.87
Neutral
48.56
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SLRC, the sentiment is Negative. The current price of 15.14 is below the 20-day moving average (MA) of 15.99, below the 50-day MA of 16.58, and below the 200-day MA of 15.42, indicating a bearish trend. The MACD of -0.56 indicates Positive momentum. The RSI at 39.87 is Neutral, neither overbought nor oversold. The STOCH value of 48.56 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SLRC.
SLR Investment Corp. Risk Analysis
SLR Investment Corp. disclosed 60 risk factors in its most recent earnings report. SLR Investment Corp. 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
SLR Investment Corp. Peers Comparison
Overall Rating
UnderperformOutperform
Sector (63)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
80 Outperform | $889.06M | 6.73 | 16.12% | 14.18% | 48.54% | 6.64% | |
79 Outperform | $770.82M | 7.00 | 13.54% | 11.96% | 37.08% | -2.29% | |
74 Outperform | $810.14M | 8.46 | 9.67% | 10.84% | 14.33% | 25.35% | |
71 Outperform | $847.02M | 6.91 | 12.06% | 12.77% | 93.63% | 24.41% | |
66 Neutral | $938.85M | 7.86 | 10.49% | 11.44% | 12.24% | -3.21% | |
65 Neutral | $724.61M | 9.02 | 9.77% | 12.94% | -11.85% | -3.73% | |
63 Neutral | $12.75B | 9.36 | 8.64% | 84.32% | 13.82% | -3.89% |
* Financial Sector Average
Performance Comparison
SLRC
SLR Investment Corp.
15.14
1.60
11.82%
PFLT
Pennantpark $
9.48
-0.59
-5.86%
CGBD
TCG BDC
14.22
-0.83
-5.51%
BCSF
Bain Capital Specialty Finance
14.60
0.52
3.69%
TRIN
Trinity Capital
14.13
1.74
14.04%
NCDL
Nuveen Churchill Direct Lending Corp.
14.97
-0.55
-3.54%
SLR Investment Corp. Earnings Call Summary
Earnings Call Date: Feb 25, 2025 | % Change Since: -11.25% | Next Earnings Date: May 7, 2025
Earnings Call Sentiment Positive
The earnings call reflected a solid performance with notable achievements such as strong specialty finance growth, stable credit quality, and a robust pipeline in asset-based lending. However, there were challenges in sponsor finance and declines in net investment and gross investment income. Overall, the highlights marginally outweigh the lowlights, indicating a cautiously optimistic outlook.Highlights
Fifteen-Year Anniversary and Investment Track Record
SLR Investment Corp. celebrated its fifteen-year anniversary since the IPO, having deployed over $7.5 billion in investments with an average loss rate of less than eleven basis points.
Solid Net Investment Income and Dividend Coverage
Net investment income for Q4 2024 was $0.44 per share, covering the quarterly dividend of $0.41. Full-year NII per share was $1.77, a 5% increase over 2023.
Portfolio Stability and Credit Quality
Net asset value increased to $18.20 per share by year-end. 96.4% of the portfolio was first-lien senior secured loans with only one investment on non-accrual.
Specialty Finance Segment Dominance
79% of the portfolio was allocated to specialty finance investments, which provided higher yields and were more insulated from market volatility.
Strong Yield Performance
The portfolio's yield increased to 12.1% from 11.8% in the prior quarter, with a significant portion of Q4 originations in specialty finance.
Robust Available Capital
SLR had over $900 million of available capital to deploy, positioning it well for future opportunities.
Asset-Based Lending (ABL) Opportunities
SLR's ABL pipeline saw significant growth, and $128 million of new ABL investments were made in Q4.
Lowlights
Net Investment Income Decline
Q4 net investment income of $0.44 per share was down from $0.45 in the previous quarter.
Gross Investment Income Decline
Gross investment income totaled $55.6 million for Q4, down from $59.8 million in Q3.
Sponsor Finance Sector Challenges
Tight spreads and competitive conditions reduced attractiveness in the sponsor finance sector, leading to a decrease in portfolio yield from 11.1% to 10.6%.
High Debt Levels
The company had approximately $1 billion of debt outstanding with a net debt to equity ratio of 1.03 times.
Company Guidance
During the Q4 2024 earnings call for SLR Investment Corp., the company reported a net investment income of $0.44 per share, which remained flat year-over-year but decreased by a penny from the previous quarter. The net investment income sufficiently covered the quarterly dividend of $0.41 per share. For the full year, the net investment income per share was $1.77, marking a 5% increase compared to 2023. The company's net asset value increased to $18.20 from $18.09 year-over-year. SLR Investment Corp. originated $338 million in new investments and received $442 million in repayments, resulting in a total portfolio value of $3.1 billion at year-end with a yield of 12.1%, up from 11.8% in the prior quarter. The portfolio consisted of 96.4% first lien senior secured loans, with only 0.6% of investments on non-accrual. The company reported a net increase in assets of $22.6 million for the quarter, while the net debt to equity ratio stood at 1.03 times. Additionally, SLR issued new unsecured notes totaling $50 million at a 6.14% interest rate, contributing to the $444 million of unsecured debt, which represents 41% of its funded debt.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.