| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 94.42 | 1371 |
| Intrinsic value (DCF) | 2.94 | -54 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 58.05 | 804 |
Monroe Capital Corporation (NASDAQ: MRCC) is a leading business development company (BDC) specializing in customized financing solutions for lower middle-market companies in the U.S. and Canada. The company provides senior, unitranche, and junior secured debt, subordinated debt, and selective equity co-investments, primarily supporting leveraged buyouts. MRCC targets businesses with EBITDA between $3 million and $35 million, offering flexible capital structures to facilitate growth and acquisitions. Operating in the competitive asset management sector, MRCC differentiates itself through its focus on niche, underserved markets and its ability to structure tailored financing solutions. As a publicly traded BDC, it provides investors with exposure to private credit markets while generating income through dividends. The company’s disciplined underwriting and active portfolio management reinforce its reputation in the financial services industry.
Monroe Capital Corporation presents an attractive opportunity for income-focused investors, given its consistent dividend yield (currently $1.00 per share) and exposure to the resilient private credit market. The company’s focus on lower middle-market borrowers provides diversification benefits and potentially higher yields compared to larger corporate debt. However, risks include interest rate sensitivity (beta of 0.97) and credit risk associated with its leveraged loan portfolio. With a market cap of ~$137 million and moderate leverage (total debt of $292 million against $9 million in cash), MRCC’s financial stability hinges on disciplined underwriting. Investors should monitor portfolio performance, particularly in economic downturns, as non-accruals could pressure earnings and dividends.
Monroe Capital Corporation competes in the crowded BDC space by targeting lower middle-market companies, a segment often overlooked by larger lenders. Its competitive advantage lies in its ability to structure bespoke financing solutions, combining senior and subordinated debt with equity participation (e.g., warrants). This hybrid approach enhances returns while mitigating risk through collateralized positions. MRCC’s deep industry relationships and experienced management team enable proprietary deal flow, reducing competition for high-quality borrowers. However, its smaller scale (~$137 million market cap) limits economies of scale compared to mega-BDCs like Ares Capital (ARCC). The company’s focus on EBITDA thresholds of $3–$35 million also exposes it to higher operational risks versus lenders targeting larger, more stable businesses. While MRCC’s unitranche offerings provide flexibility, they face stiff competition from private credit funds and regional banks expanding into middle-market lending.