Abstract
FS KKR Capital will report fiscal fourth-quarter results on February 25, 2026 Post Market; this preview summarizes consensus projections for revenue, profitability, and EPS, compares them with the previous quarter’s performance, and outlines analysts’ prevailing views on the risk-reward into the print.
Market Forecast
Consensus points to a softer topline and earnings this quarter, with FS KKR Capital’s revenue projected at $0.36 billion, implying a year-over-year decline of 13.72%, and EPS expected at $0.54 with a forecast year-over-year decrease of 19.71%; forecasts do not provide explicit gross profit margin or net margin, but FS KKR Capital historically carries a high accounting gross margin as a BDC. Expectations center on stable interest income but muted fee/other income, which could keep adjusted EPS under pressure; the portfolio’s income-generating core remains resilient, while non-recurring items are expected to be limited. The most promising segment remains interest income at $0.23 billion, though year-over-year comparisons are challenged by base effects and potential yield normalization.
Last Quarter Review
FS KKR Capital’s latest quarter delivered revenue of $0.37 billion, a gross profit margin of 100.00%, GAAP net profit attributable to shareholders of $0.21 billion, a net profit margin of 57.37%, and adjusted EPS of $0.57, with revenue down 15.42% year over year and adjusted EPS down 22.97% year over year. The quarter’s notable highlight was a sharp rebound in net profit quarter-on-quarter, with net profit growth of 202.39% driven by stronger net investment income and lower valuation losses. Main business performance was led by interest income of $0.23 billion, dividends of $0.08 billion, and realized interest and fees totaling $0.06 billion and $0.00 billion respectively.
Current Quarter Outlook
Core Net Investment Income and Interest Income
FS KKR Capital’s core driver this quarter remains net investment income derived from interest on its debt portfolio. With the forecast revenue at $0.36 billion, the company’s run-rate suggests yields remain healthy, but the year-over-year decline of 13.72% indicates that base rates or fee contributions may be lower than the comparable period. The balance of floating-rate assets versus liabilities will influence net investment income as benchmark rates evolve. If funding costs stabilize while asset yields hold, net margin may remain relatively firm despite topline pressure.
Dividend and Fee Contributions
Dividend income and fee-related revenue historically represent a smaller, more volatile piece of the revenue mix. The absence of explicit guidance for these line items implies a conservative setup into the print. Should portfolio exits or repayments accelerate, fee income could surprise positively; however, consensus seems to discount this, suggesting EPS bias remains to the downside if fees undershoot. Investors will monitor realizations and prepayment activity as swing factors for adjusted EPS.
Credit Quality and Valuation Marks
Non-cash valuation adjustments can materially impact GAAP net income, as reflected in last quarter’s pronounced quarter-on-quarter rebound. This quarter, valuation marks on equity and debt holdings will be sensitive to spread moves and individual portfolio company performance. Stable or tightening spreads and resilient borrower fundamentals would limit fair value losses, whereas idiosyncratic stress could weigh on net income even if net investment income holds up. The path of valuation marks is a key determinant of the gap between GAAP earnings and adjusted EPS.
Capital Structure, Leverage, and Distributions
The company’s leverage profile and funding mix affect net interest margin and dividend capacity. With earnings projected lower year over year, investors will assess whether recurring net investment income continues to cover the regular dividend. Any signal on supplemental or special distributions will hinge on realized gains and spillover income. Debt maturities and pricing relative to asset yields will be closely watched for guidance on forward EPS power.
Portfolio Mix and New Originations
The pace of new originations and repayments will shape near-term revenue. A slower origination environment would moderate asset growth and interest income, while elevated repayments could pressure fee income. Conversely, deploying into higher-spread opportunities could partially offset revenue headwinds, though this may come with higher credit risk. Commentary on pipeline quality and competition for deals will provide context for revenue trajectory.
Analyst Opinions
The prevailing stance among analysts skews cautious going into the quarter, with a majority expecting year-over-year declines in both revenue and EPS and limited upside catalysts in fee income or valuation marks. Several institutional commentaries emphasize the sensitivity of GAAP results to fair value marks and the likelihood that net investment income remains stable but insufficient to drive growth at current forecasts. The consensus view suggests investors should look for confirmation of credit stability and dividend coverage rather than expecting upside surprises in the quarter.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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