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1. Company Snapshot

1.a. Company Description

FS KKR Capital Corp.is a business development company specializing in investments in debt securities.It provides customized credit solutions to private middle market U.S. companies.


It invest primarily in the senior secured debt and, to a lesser extent, the subordinated debt of private middle market U.S. companies.It seeks to purchase interests in loans through secondary market transactions or directly from the target companies as primary market investments.It also seeks to invest in first lien senior secured loans, second lien secured loans and, to a lesser extent, subordinated loans, or mezzanine loans.


In connection with the debt investments, the firm also receives equity interests such as warrants or options as additional consideration.It also seek to purchase minority interests in the form of common or preferred equity in our target companies, either in conjunction with one of the debt investments or through a co-investment with a financial sponsor.Additionally, on an opportunistic basis, the fund may also invest in corporate bonds and similar debt securities.


The fund does not seek to invest in start-up companies, turnaround situations, or companies with speculative business plans.It seeks to invest in small and middle-market companies based in United States.The fund seeks to invest in firms with annual revenue between $10 million to $2.5 billion.


It focus on providing customized one-stop credit solutions to private upper middle market companies with annual EBITDA of $50 million to $100 million at the time of investment.It seeks to exit from securities by selling them in a privately negotiated over- the- counter market.For any investments that are not able to be sold within the secondary market, the firm seeks to exit such investments through repayment, an initial public offering of equity securities, merger, sale or recapitalization.

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1.b. Last Insights on FSK

FS KKR Capital Corp.'s recent performance was negatively impacted by deteriorating fundamentals, including a 29.7% dividend cut from $0.70 to $0.48 per quarter, reflecting unsustainable payout levels and rising non-accruals. The company's net investment income and NAV per share declined, while non-accrual rates rose to 3.4% at fair value. Additionally, the debt-to-equity ratio increased to 1.22x, and negative net investment activity was reported. (Source: FS KKR Capital Corp. Q4 2025 results)

1.c. Company Highlights

2. FS KKR Capital Corp.'s Earnings Report: Navigating Challenges and Opportunities

FS KKR Capital Corp.'s financial performance for the fourth quarter and full year 2025 revealed a mixed picture, with the company achieving its investment origination goals but facing downward pressure on certain investments. The company's net investment income was $0.48 per share, while adjusted net investment income was $0.52 per share, slightly below analyst estimates of $0.55. The net asset value per share declined by 5% to $20.89, reflecting the challenges faced by the company.

Publication Date: Mar -01

📋 Highlights
  • Investment Origination: Originated $5.6 billion in investments in 2025, with a focus on first lien and asset-based finance.
  • Net Investment Income: GAAP net investment income was $0.48 per share, with adjusted net investment income at $0.52 per share.
  • NAV Decline: Net asset value per share fell 5% to $20.89 due to downward pressure on certain investments.
  • Liquidity Position: Ended the quarter with $3.8 billion in available liquidity, with 62% of the drawn balance sheet in unsecured debt.
  • Portfolio Yield: Weighted average yield on accruing debt investments was 10% as of December 31, 2025, with $13 billion in total portfolio fair value.

Investment Portfolio and Performance

The company's investment portfolio had a fair value of $13 billion as of December 31, 2025, consisting of 232 portfolio companies. The weighted average yield on accruing debt investments was 10% as of December 31. The company's focus on senior secured investments is evident, with approximately 58% of its portfolio consisting of first lien loans and 62% senior secured debt. The nonaccrual rate was 5.5% of its portfolio on a cost basis and 3.4% on a fair value basis as of the end of the fourth quarter.

Liquidity and Balance Sheet

The company ended the quarter with approximately $3.8 billion of available liquidity, providing a strong foundation to navigate potential challenges. The Board declared a total first quarter distribution of $0.48 per share, representing a 100% payout of GAAP net investment income and a 9.2% yield on the ending fourth quarter net asset value. The company's gross and net debt-to-equity levels were 130% and 122%, respectively, within the target range of 1 to 1.25x net debt to equity.

Valuation and Outlook

With a P/B Ratio of 0.52, the company's stock appears to be undervalued relative to its book value. The Dividend Yield stands at 25.93%, indicating an attractive income opportunity for investors. As the company looks ahead to 2026, it is focused on addressing underperforming assets, continuing to focus on first lien senior secured originations, and preserving strong liquidity and balance sheet flexibility. Analysts estimate next year's revenue growth at -3.4%, highlighting the challenges that the company may face. However, the company's proactive approach to portfolio management and its commitment to maximizing value from problem credits on a case-by-case basis are expected to help mitigate these challenges.

Key Investment Themes

The company is navigating several key investment themes, including the emergence of AI and its potential risk to software companies. The company has been evaluating AI risk in its portfolio and has a framework to assess it. Additionally, the company is focused on addressing common themes among underperforming assets, including operational underperformance and government contract risk. The company's joint venture with South Carolina Retirement Systems Group Trust increased its aggregate capital commitment, demonstrating its commitment to growth and diversification.

3. NewsRoom

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Finally Using My Cash For Big Yields

05:20

Source: seekingalpha.com

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Is the Options Market Predicting a Spike in FS KKR Capital Stock?

Mar -27

Source: zacks.com

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WhiteHorse Finance (NASDAQ:WHF) vs. FS KKR Capital (NYSE:FSK) Critical Survey

Mar -27

Source: defenseworld.net

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Securities Fraud Investigation Into FS KKR Capital Corp. (FSK) Announced – Shareholders Who Lost Money Urged To Contact Glancy Prongay Wolke & Rotter LLP, a Leading Securities Fraud Law Firm

Mar -26

Source: businesswire.com

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INVESTOR ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of FS KKR Capital Corp. - FSK

Mar -26

Source: prnewswire.com

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FS KKR Capital Corp. (FSK) Shareholders Who Lost Money – Contact Law Offices of Howard G. Smith About Securities Fraud Investigation

Mar -26

Source: businesswire.com

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Securities Fraud Investigation Into FS KKR Capital Corp. (FSK) Announced – Shareholders Who Lost Money Urged To Contact The Law Offices of Frank R. Cruz

Mar -25

Source: businesswire.com

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INVESTOR ALERT: Pomerantz Law Firm Investigates Claims On Behalf of Investors of FS KKR Capital Corp. - FSK

Mar -24

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (9.90%)

6. Segments

Investment and Related Activities

Expected Growth: 9.9%

FS KKR Capital Corp.'s 9.9% growth in Investment and Related Activities is driven by increasing demand for alternative investment solutions, expansion into new markets, and strategic acquisitions. Additionally, the company's diversified investment portfolio, strong credit quality, and effective risk management practices have contributed to its growth.

7. Detailed Products

Senior Loans

FS KKR Capital Corp. provides senior loans to companies, offering a stable source of capital for growth, acquisitions, and refinancing.

Unitranche Loans

FS KKR Capital Corp. offers unitranche loans, which combine senior and subordinated debt into a single loan, providing a simplified capital structure.

Second Lien Loans

FS KKR Capital Corp. provides second lien loans, which offer additional capital to companies with existing senior debt, providing flexibility and liquidity.

Mezzanine Debt

FS KKR Capital Corp. offers mezzanine debt, which combines debt and equity features, providing a flexible financing solution for companies.

Equity Co-Investments

FS KKR Capital Corp. makes equity co-investments alongside its debt investments, providing additional capital and strategic support to portfolio companies.

8. FS KKR Capital Corp.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for FS KKR Capital Corp. is medium due to the presence of alternative investment options for investors, such as other private equity firms and investment companies.

Bargaining Power Of Customers

The bargaining power of customers for FS KKR Capital Corp. is low due to the company's diversified investor base and limited dependence on individual investors.

Bargaining Power Of Suppliers

The bargaining power of suppliers for FS KKR Capital Corp. is medium due to the company's reliance on a diverse range of suppliers for its investment activities.

Threat Of New Entrants

The threat of new entrants for FS KKR Capital Corp. is high due to the relatively low barriers to entry in the private equity industry and the increasing popularity of alternative investment options.

Intensity Of Rivalry

The intensity of rivalry for FS KKR Capital Corp. is high due to the highly competitive nature of the private equity industry and the presence of several established players.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 54.45%
Debt Cost 5.73%
Equity Weight 45.55%
Equity Cost 10.31%
WACC 7.82%
Leverage 119.54%

11. Quality Control: FS KKR Capital Corp. passed 2 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Federated Hermes

A-Score: 7.5/10

Value: 6.0

Growth: 6.6

Quality: 8.5

Yield: 6.0

Momentum: 8.0

Volatility: 9.7

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Golub Capital BDC

A-Score: 7.0/10

Value: 6.4

Growth: 6.0

Quality: 6.6

Yield: 10.0

Momentum: 3.0

Volatility: 10.0

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Ares Capital

A-Score: 7.0/10

Value: 5.9

Growth: 4.7

Quality: 7.3

Yield: 10.0

Momentum: 4.0

Volatility: 10.0

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State Street

A-Score: 6.6/10

Value: 6.7

Growth: 4.7

Quality: 5.6

Yield: 6.0

Momentum: 8.0

Volatility: 8.7

1-Year Total Return ->

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Victory Capital Holdings

A-Score: 6.3/10

Value: 5.8

Growth: 6.7

Quality: 7.8

Yield: 6.0

Momentum: 5.0

Volatility: 6.7

1-Year Total Return ->

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FS KKR Capital

A-Score: 6.3/10

Value: 6.2

Growth: 4.6

Quality: 5.8

Yield: 10.0

Momentum: 2.0

Volatility: 9.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

9.91$

Current Price

9.91$

Potential

-0.00%

Expected Cash-Flows