A Look at Main Street Capital’s (MAIN) Valuation Following Dividend Hikes and Record Net Asset Value Milestones

Main Street Capital (MAIN) just wrapped up a milestone-filled third quarter, reporting its 13th straight quarter of record net asset value per share and a 17% annualized return on equity. The company declared its seventeenth quarterly supplemental dividend and raised regular monthly dividends by 4% for the coming year. These moves reflect ongoing confidence in its strategy and portfolio growth.

See our latest analysis for Main Street Capital.

Main Street Capital’s $58.70 share price reflects solid momentum after a string of upbeat announcements, such as a fresh supplemental dividend and a 4% increase in monthly payouts. Even with some recent volatility, the company boasts a 20% total shareholder return over the past year and an impressive 99% three-year total return, underscoring consistent long-term value creation for investors.

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With share price gains and growing dividends drawing attention, the question now is whether Main Street Capital’s strong run still leaves room for upside, or if the market has already priced in every bit of future growth.

Most Popular Narrative: 5.3% Undervalued

Main Street Capital's most followed narrative sees its fair value ($62) moderately ahead of the recent closing price, highlighting a rare valuation gap for such a well-known dividend player.

The company reported significant growth in both its lower middle market and private loan investment portfolios, along with an attractive investment pipeline, suggesting potential for continued growth in earnings and asset value which can contribute positively to its share price.

Read the complete narrative.

Curious what powers this valuation? The behind-the-scenes calculus features shifting investment focus and bold margin assumptions. Wonder which profit projections caught analysts’ attention? There is more to the story hiding in the full numbers. Go uncover what is driving this 5% upside now.

Result: Fair Value of $62 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing success in portfolio growth and record net asset value could easily defy any forecast of slower or negative earnings momentum.

Find out about the key risks to this Main Street Capital narrative.

Another View: What Does Our Model Say?

While the most popular fair value narrative points to 5% undervaluation, our SWS DCF model tells a different story. According to the DCF calculation, Main Street Capital is currently trading above its estimated fair value of $52.79. This suggests the market may be a step ahead of future earnings growth. Does this mean expectations are already priced in, or is there another catalyst on the horizon?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Main Street Capital for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 865 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Main Street Capital Narrative

If you see things differently or want to run the numbers your own way, crafting a personal narrative is just minutes away, so why not Do it your way

A great starting point for your Main Street Capital research is our analysis highlighting 2 key rewards and 5 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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