Stock Analysis & Valuation Blue Owl Capital Corporation (OBDC)

• Previous Close: $12.00
• Sector Valuation Confidence Level: High

Valuation method	Value, $	Upside, %
Artificial intelligence (AI)	24.56	105
Intrinsic value (DCF)	5.53	-54
Graham-Dodd Method		n/a
Graham Formula		n/a

Strategic Investment Analysis

Company Overview

Blue Owl Capital Corporation (NYSE: OBDC) is a leading business development company (BDC) specializing in direct lending to middle-market companies in the U.S. The firm provides flexible financing solutions, including senior secured loans, subordinated debt, mezzanine financing, and equity-related securities, targeting businesses with EBITDA between $10 million and $250 million. Operating in the Financial Services sector, OBDC focuses on growth capital, acquisitions, refinancing, and recapitalizations, serving a critical niche in private credit. With a market cap exceeding $7.3 billion, OBDC stands out for its disciplined underwriting, strong risk-adjusted returns, and consistent dividend payouts. Its investment strategy emphasizes downside protection while delivering attractive yields, making it a key player in the BDC space. The company’s robust portfolio and experienced management team position it well in the competitive private credit landscape.

Investment Summary

Blue Owl Capital Corporation (OBDC) presents a compelling investment case due to its strong middle-market lending focus, consistent dividend yield (~10%+), and disciplined credit underwriting. The company benefits from a diversified portfolio, low exposure to non-accruals, and stable net interest margins. However, risks include interest rate sensitivity (given its floating-rate loan book) and broader credit market volatility. With a beta of 0.76, OBDC offers lower volatility than equities, appealing to income-focused investors. The firm’s high leverage (~75% debt-to-equity) warrants monitoring, but its strong liquidity ($432M cash) and solid earnings (EPS $1.53) support its investment-grade profile. Long-term investors may find OBDC attractive for its yield and defensive positioning in private credit.

Competitive Analysis

Blue Owl Capital Corporation (OBDC) competes in the crowded BDC space but differentiates itself through its middle-market specialization, strong sponsor relationships, and conservative underwriting. Its competitive advantage lies in its affiliation with Blue Owl Capital, a leading alternative asset manager, which provides deal flow advantages and operational synergies. OBDC’s focus on first-lien senior secured loans (over 85% of its portfolio) enhances credit quality, while its scale allows for competitive pricing and structuring flexibility. Compared to peers, OBDC maintains lower leverage and higher interest coverage, reducing downside risk. However, it faces stiff competition from larger BDCs like Ares Capital (ARCC) and FS KKR Capital (FSK), which have broader platforms and deeper resources. OBDC’s niche expertise in the upper middle market (EBITDA $50M–$250M) helps mitigate competition, but its reliance on floating-rate loans could pressure margins if rates decline. Overall, OBDC’s disciplined approach and strong sponsor backing position it well in the BDC landscape.

Major Competitors

• Ares Capital Corporation (ARCC): Ares Capital (ARCC) is the largest BDC by market cap, offering scale advantages and diversified exposure across industries. It has a strong track record in senior secured lending but carries higher leverage than OBDC. ARCC’s broader platform provides resilience, though its yield is slightly lower.
• FS KKR Capital Corp. (FSK): FS KKR Capital (FSK) is another large BDC with a focus on middle-market lending. It has a higher yield than OBDC but also greater exposure to riskier second-lien and unsecured debt. FSK’s KKR affiliation provides deal flow but comes with higher fee structures.
• Hercules Capital, Inc. (HTGC): Hercules Capital (HTGC) specializes in venture debt and growth-stage lending, differing from OBDC’s mature middle-market focus. HTGC offers higher growth potential but with elevated risk due to its tech-heavy portfolio and early-stage exposure.
• Main Street Capital Corporation (MAIN): Main Street Capital (MAIN) is a conservatively managed BDC with a lower-risk portfolio and strong dividend history. It focuses on smaller middle-market companies (EBITDA <$50M), contrasting with OBDC’s upper-middle-market strategy. MAIN trades at a premium valuation due to its consistent performance.