Is Monroe Capital Corp. overvalued or undervalued?

As of 9 August 2023, Monroe Capital Corp. has moved from a risky to a very attractive valuation grade, indicating a significant improvement in its perceived value. The company is currently undervalued, with a P/E ratio of 20, which is notably higher than peers such as Stellus Capital Investment Corp. at 10.28 and Saratoga Investment Corp. at 12.07. Additionally, Monroe's EV to EBITDA stands at 4.68, while its PEG ratio is exceptionally low at 0.01, suggesting strong growth potential relative to its price.
Monroe Capital Corp. also boasts a dividend yield of 15.41% and a return on capital employed (ROCE) of 15.90%, which further supports its attractive valuation. In comparison, BlackRock Capital Investment Corp. has a P/E of 10.18 and an EV to EBITDA of 5.37, highlighting Monroe's competitive position in the market. Despite its recent stock performance trailing behind the S&P 500, the underlying metrics suggest that Monroe Capital is positioned for potential upside, reinforcing its undervalued status.