Is OFS Capital Corp. overvalued or undervalued?

As of 3 March 2025, the valuation grade for OFS Capital Corp. has moved from risky to very attractive. This indicates a significant improvement in the company's perceived value. The company is currently undervalued, with a P/E ratio of 4, a Price to Book Value of 0.71, and an EV to EBITDA ratio of 2.35. These figures suggest that the stock is trading at a substantial discount compared to its earnings and book value.
In comparison to its peers, OFS Capital Corp. has a notably lower P/E ratio than Stellus Capital Investment Corp. at 10.28 and BlackRock Capital Investment Corp. at 10.18, both of which are classified as attractive. Additionally, the PEG ratio of OFS Capital Corp. stands at an impressive 0.01, indicating strong growth potential relative to its valuation. While the stock has underperformed the S&P 500 over the past year, the current valuation metrics suggest that it presents a compelling investment opportunity moving forward.