Earnings momentum for Medley Capital Corporation (MCC - Snapshot Report) has increased following its strong fiscal third quarter results, which included year-over year earnings growth of 71.4%. Continued improvement in investment income should help this private owned investment management firm grow profitability in the upcoming quarters.
Strong estimate revisions helped Medley Capital achieve a Zacks #1 Rank (Strong Buy) status on August 7. The stock also hit its 52-week high on August 14. In addition, a P/B multiple of just 1.0 makes this stock an attractive pick for value investors.
Impressive Fiscal Third Quarter Results
On August 2, Medley Capital reported fiscal third quarter 2012 net investment income per share of 36 cents, topping the Zacks Consensus Estimate of 33 cents by 9.1% and the year-ago income of 21 cents by 71.4%. The upsurge was mainly aided by growth in total interest income, partially offset by higher operating expenses.
Net investment income climbed 72.0% year over year to $6.2 million. However, total expenses significantly increased to $6.0 million from $1.8 million in the year-ago period, aided by higher base management fees, elevated incentive fees and increased general and administrative expenses.
Earnings Estimates on an Upswing
Over the last 30 days, the Zacks Consensus Estimate for 2012 advanced 3.2% to $1.30 per share on the back of upward revisions from five of six estimates. This implies a year-over-year growth of 132.7%. For 2013, four positive revisions out of six estimates helped the Zacks Consensus Estimate increase 5.8% to $1.45 over the same time frame.
Along with a P/B multiple of 1.0, Medley Capital has a forward P/E ratio as low as 10.0. (A P/E ratio under 15.0 and a P/B ratio below 3.0 generally indicate value). Furthermore, the companys share price has gained nearly 25.8% year-to-date.
Additionally, Medley Capital currently enjoys a dividend yield of 9.6%. The fiscal third quarter of 2012 marked the companys sixth straight quarter with a dividend increase. Therefore, in addition to being a value stock, the company offers an income opportunity.
The chart below clearly shows that after a plunge in September 2011, the stock is back on the recovery path.
Headquartered in New York, Medley Capital, a private owned investment management firm invests in the public equity markets of the United States. With $1.4 billion of assets under management in private funds, hedge funds and via its public business development company, the firm also operates in San Francisco, California and Hong Kong. With a market capital of about $225 million, Medley Capital competes with TICC Capital Corp. (TICC) among others.