Franklin BSP Capital Corp (FRBP)

Price$8.51Cached quoteAs of 2026-09-05 06:09 UTC

AI: Undervalued

Price checkThe shares look undervalued, but the quoted discount partly reflects severe trading limits.

The latest verifiable OTC close values the company at about 63% of June net asset value, meaning investments left for common shareholders after debts, or roughly a 37% discount. It is also about twelve times trailing reported earnings, while the declared payout annualizes above 11%. Those signals support Undervalued. Still, the quoted session traded only 3,278 shares and trading is sporadic, so the price may not be achievable for a large position; illiquidity warrants a meaningful discount.

Big pictureCore lending income still covers payouts, although falling rates and credit losses are squeezing results.

Net income rose 17% in 2025 to $104.3 million, but the newer trend is softer. Second-quarter investment income fell 6.8% from a year earlier to $96.4 million as benchmark rates declined, and net investment income—interest and dividends after operating and borrowing costs—fell 16% to $33.2 million. At roughly $0.25 a share, it only just covered the $0.24 payout; first-half coverage was about 1.08 times. Ordinary operating cash flow swings with loan buying and repayments, so payout coverage is the cleaner durability test.

Business strengthSenior secured loans and adequate liquidity help, but leverage leaves limited room for mistakes.

At June, the portfolio carried a fair value of $4.08 billion, with roughly three quarters in first-lien loans that stand first in line for repayment. Debt of $2.20 billion equaled about 1.23 times $1.79 billion of equity. KBRA affirmed BBB with a Stable outlook and measured $693.1 million of cash plus unused bank lines in March. However, loans no longer paying interest rose to eleven borrowers and 1.7% of portfolio fair value, from eight and 1.1% at year-end, reducing the protection that diversification provides.

What could change the storyStable credit and covered payouts could unlock value; rising defaults would validate the discount.

The May tender retired 2.5 million shares at net asset value for $33.95 million, reducing the share count without favoring either remaining or exiting holders. Yet investors tendered 34.5 million shares, exposing heavy unmet selling demand. The bull case needs quarterly net investment income to keep covering $0.24, June net assets near $13.42 a share to stabilize, and troubled loans to retreat. The bear case is lower benchmark rates plus more borrowers stopping cash interest, pushing earnings below the payout and causing further net-asset erosion.

AI: News

Second-quarter income softenedLower benchmark rates reduced lending income, while the payout remained only narrowly covered.

On August 12, the company filed second-quarter results showing investment income of $96.4 million, down 6.8% from a year earlier, and net investment income of $33.2 million, down 16%. That income was about $0.25 a share versus the $0.24 payout. Loans not paying interest increased to 1.7% of portfolio fair value from 1.1% at year-end. These changes weaken the earnings outlook; sparse OTC trading makes any short-term market reaction difficult to measure reliably.

Quarterly payout held steadyThe board kept the cash payout unchanged, easing immediate fears of another reduction.

On August 13, the board declared a $0.24 common distribution payable around September 30. That matched the first two 2026 quarters but remained below the $0.29 regular amount paid in each 2025 quarter. At the latest verifiable quotation, the new annualized rate yields above 11%. Holding the payout supports the income case after softer lending results, though second-quarter net investment income covered it by only about 4%, leaving little cushion.

Tender demand overwhelmed capacityInvestors sought far more liquidity than the company offered, revealing strong selling pressure.

Reported on May 12, the company had repurchased 2,499,996 shares for $33.95 million at its year-end net asset value. Investors tendered 34,527,343 shares, so only about 7.2% of requested shares were accepted. The repurchase cut the share count by roughly 1.85% without buying below reported net assets per share, limiting value creation for remaining holders. The large unmet demand is direct evidence of difficult liquidity and helps explain why sparse OTC trades can sit well below reported net assets.

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Revenue

2020

2021

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2025

Net income

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Free cash flow

No reported data

Total cash / debt

CashTotal debt

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Financial statements

	2025	2024	2023	2022	2021	2020
Revenue	$418.5M	$413.3M	$94.7M	$56.7M	$12.2M	$0
Operating expenses	$49.4M	$52.3M	$6.9M	$3.8M	—	—
Net income	$104.3M	$89.3M	$44.8M	$23.2M	$6.9M	−$414,000
Net profit margin	24.93%	21.60%	47.29%	40.89%	56.10%	—
Basic EPSper basic share	$0.73	$0.64	$1.41	$1.12	$1.30	-$4,133.15
Diluted EPSper diluted share	$0.73	$0.64	$1.41	$1.12	$1.30	-$4,133.15

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Insider buys & sells

Jul 1, 2024–Jun 30, 2026

Buys0$0.00 disclosed value

Sells (SEC code S)0$0.00 disclosed value

No insider transactions transactions were reported in the stored SEC coverage.

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Franklin BSP Capital Corp (FRBP)

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