FSK - FS KKR: Q4 Huge Discount To NAV Justified But This BDC Remains A Great Income Play (Rating Downgrade)
2024-03-29 17:00:00 ET
Summary
- FS KKR Capital, the fourth largest BDC, has recently sold off due to rising non-accruals and a drop in net investment income.
- Despite these challenges, the BDC's dividend is safe and covered by NII, and its balance sheet remains in good shape with ample liquidity.
- The BDC is currently undervalued, making it an attractive income play for investors in search of higher yields.
- FSK's poor performance in Q4 also caused their NAV price to decline quarter-over-quarter, which also played a part in the sell-off.
- At the current valuation, the P/NAV ratio sits below their 3-year average, making the stock attractive for income-focused investors.
Introduction
Many may be wondering how well BDCs will fare in 2024, with rates still expected to decline. I am a big believer in the sector and think they are more than just high interest rate environment investments. With the banking crisis roughly a year ago causing tighter lending standards, I think this will benefit the sector for the long term....
FS KKR: Q4, Huge Discount To NAV Justified But This BDC Remains A Great Income Play (Rating Downgrade)