Is It Too Late To Consider Main Street Capital (MAIN) After Strong Five Year Share Returns?

Simply Wall St.02-02 07:19

If you are wondering whether Main Street Capital's share price still makes sense at today's level, or if the value story has already played out, this article breaks down what the current price might ...

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The stock last closed at US$63.80, with returns of 3.3% over the past month, 3.3% year to date and 10.6% over the past year, set against a very large 3 year return and a 178.1% return over 5 years. Recent news coverage has highlighted Main Street Capital's role as a business development company and its focus on providing financing solutions to lower middle market and middle market companies. This helps frame how investors think about its income profile and risk. There has also been ongoing commentary around the stock's income characteristics and how that fits into portfolios seeking regular cash flows. On our valuation checks, Main Street Capital scores 4 out of 6, as shown in our valuation summary. Next we will look at what different valuation methods say about the stock today and finish with a simple way to keep on top of its valuation over time.  Find out why Main Street Capital's 10.6% return over the last year is lagging behind its peers. AdvertisementApproach 1: Main Street Capital Excess Returns Analysis The Excess Returns model looks at how much profit a company is expected to generate above the return that equity investors typically require, then capitalizes those extra profits into an estimate of fair value per share. For Main Street Capital, the model starts with a Book Value of $32.78 per share and a Stable EPS of $4.77 per share, based on weighted future Return on Equity estimates from 6 analysts. The Average Return on Equity used is 13.54%. The Cost of Equity is $3.14 per share, which implies an Excess Return of $1.62 per share. The Stable Book Value input of $35.18 per share comes from weighted future Book Value estimates from 2 analysts. Using these assumptions, the Excess Returns valuation points to an intrinsic value of about $63.85 per share, only slightly above the recent share price of $63.80. That implies the stock is around 0.1% undervalued and effectively in line with where it trades today. Result: ABOUT RIGHT Main Street Capital is fairly valued according to our Excess Returns, but this can change at a moment's notice. Track the value in your watchlist or portfolio and be alerted on when to act. MAIN Discounted Cash Flow as at Feb 2026 Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Main Street Capital. Approach 2: Main Street Capital Price vs Earnings For a profitable company like Main Street Capital, the P/E ratio is a useful shorthand for what investors are currently paying for each dollar of earnings. It links directly to the income stream you see today, so it is often a practical check against more detailed models. What counts as a “normal” P/E depends on how the market views a company’s growth prospects and risk. Higher expected growth or lower perceived risk can support a higher multiple, while lower growth or higher risk tends to go with a lower one. Main Street Capital currently trades on a P/E of 10.65x. That is below the Capital Markets industry average of 23.62x and also below the peer group average of 16.11x. Simply Wall St’s Fair Ratio for Main Street Capital is 11.49x, which is its proprietary estimate of what a reasonable P/E might be once you factor in earnings growth, profit margins, size, risk profile and industry. This Fair Ratio is more tailored than a plain comparison with peers or the broad industry because it attempts to adjust for those company specific drivers rather than assuming one size fits all. Compared with the actual P/E of 10.65x, the Fair Ratio of 11.49x indicates that the shares sit slightly below that tailored benchmark. Result: UNDERVALUED NYSE:MAIN P/E Ratio as at Feb 2026 P/E ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1426 companies where insiders are betting big on explosive growth. Upgrade Your Decision Making: Choose your Main Street Capital Narrative Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which simply means writing down your story about Main Street Capital, including what you think its future revenue, earnings and margins could look like, and the fair value that falls out of those assumptions. A Narrative links three things in a straight line: what you believe about the business, the financial forecast that reflects those beliefs and the fair value that comes from that forecast, so you can see clearly how each assumption affects the number you compare with today’s share price. On Simply Wall St, Narratives live in the Community page. They are designed to be quick to set up, easy to adjust and automatically updated when fresh information such as news or earnings is added to the platform, which means your Main Street Capital view can stay current without you rebuilding a full model every time. For example, one Main Street Capital Narrative on the Community page might use a higher fair value and stronger margin assumptions, while another uses a lower fair value and more cautious earnings path, giving you a clear sense of where your own expectations sit between the most optimistic and most cautious views. Do you think there's more to the story for Main Street Capital? Head over to our Community to see what others are saying! NYSE:MAIN 1-Year Stock Price Chart  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    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\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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