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Hercules Capital (HTGC) Beats on Q4 Earnings, Expenses Rise
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Hercules Capital, Inc.’s (HTGC - Free Report) fourth-quarter 2016 net investment income of 43 cents per share easily outpaced the Zacks Consensus Estimate of 32 cents. Also, the figure reflected a surge of 53.6% from the year-ago quarter.
Better-than-expected results were attributable to a rise in total investment income. Further, a sound liquidity position and growth in investment portfolio remained impressive. However, higher expenses and a fall in net asset value were on the downside.
Distributional Net Operating Income for the quarter came in at $34.5 million or 45 cents per share, up from $22.3 million or 31 cents per share in the prior-year quarter.
Total investment income in the reported quarter was $47.5 million, up 20.5% year over year. The increase is mainly driven by debt investment portfolio growth and a greater weighted average principal outstanding of the company's debt investment portfolio between the periods. Also, the figure outpaced the Zacks Consensus Estimate of $45.4 million.
Interest expenses and fees of $10.1 million were up 6.3% from the prior-year quarter.
Total operating expenses (excluding interest expenses and loan fees) rose 26% year over year to $12.3 million. The rise was largely led by higher total employee compensation costs.
Total Portfolio Value & New Commitments
The fair value of Hercules Capital’s total investment portfolio was $1.4 billion as of Dec 31, 2016. In the reported quarter, the company provided approximately $213.1 million in new debt and equity-financing commitments to new and existing portfolio companies.
Balance Sheet
As of Dec 31, 2016, Hercules Capital’s net asset value was $9.90 per share compared with $9.94 as of Dec 31, 2015. The company had $203 million in liquidity, including $13 million in cash and cash equivalents and $190 million in credit facilities as of Dec 31, 2016.
As of Dec 31, 2016, the weighted average cost of debt, comprising interest and fees was 5.9%, compared with 6.2% as of Dec 31, 2015.
Our Take
Hercules Capital’s loan origination activity continues to be on track and it strategically deploys its capital while maintaining a balanced and diversified approach across various industries and sectors. Further, the company is expected to witness growing demand for customized financing in the coming quarters, based on the market optimism for public equities and an improving economic environment.
However, elevated expense levels owing to its efforts to enhance originations are expected to hurt bottom line. Also, threat of concentration risks and stricter regulations continue to be the concerns.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Essent Group Ltd. (ESNT - Free Report) : The Zacks Consensus Estimate for 2017 climbed 6.7% to $2.88, over the past 30 days. The company boasts a Zacks Rank #1.
PJT Partners Inc. (PJT - Free Report) : Over the last 30 days, the Zacks Consensus Estimate for 2017 jumped 7.4% to $1.60. The company also flaunts a Zacks Rank #1.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>
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Hercules Capital (HTGC) Beats on Q4 Earnings, Expenses Rise
Hercules Capital, Inc.’s (HTGC - Free Report) fourth-quarter 2016 net investment income of 43 cents per share easily outpaced the Zacks Consensus Estimate of 32 cents. Also, the figure reflected a surge of 53.6% from the year-ago quarter.
Better-than-expected results were attributable to a rise in total investment income. Further, a sound liquidity position and growth in investment portfolio remained impressive. However, higher expenses and a fall in net asset value were on the downside.
Distributional Net Operating Income for the quarter came in at $34.5 million or 45 cents per share, up from $22.3 million or 31 cents per share in the prior-year quarter.
Total Investment Income Improves, Expenses Rise
Total investment income in the reported quarter was $47.5 million, up 20.5% year over year. The increase is mainly driven by debt investment portfolio growth and a greater weighted average principal outstanding of the company's debt investment portfolio between the periods. Also, the figure outpaced the Zacks Consensus Estimate of $45.4 million.
Interest expenses and fees of $10.1 million were up 6.3% from the prior-year quarter.
Total operating expenses (excluding interest expenses and loan fees) rose 26% year over year to $12.3 million. The rise was largely led by higher total employee compensation costs.
Total Portfolio Value & New Commitments
The fair value of Hercules Capital’s total investment portfolio was $1.4 billion as of Dec 31, 2016. In the reported quarter, the company provided approximately $213.1 million in new debt and equity-financing commitments to new and existing portfolio companies.
Balance Sheet
As of Dec 31, 2016, Hercules Capital’s net asset value was $9.90 per share compared with $9.94 as of Dec 31, 2015. The company had $203 million in liquidity, including $13 million in cash and cash equivalents and $190 million in credit facilities as of Dec 31, 2016.
As of Dec 31, 2016, the weighted average cost of debt, comprising interest and fees was 5.9%, compared with 6.2% as of Dec 31, 2015.
Our Take
Hercules Capital’s loan origination activity continues to be on track and it strategically deploys its capital while maintaining a balanced and diversified approach across various industries and sectors. Further, the company is expected to witness growing demand for customized financing in the coming quarters, based on the market optimism for public equities and an improving economic environment.
However, elevated expense levels owing to its efforts to enhance originations are expected to hurt bottom line. Also, threat of concentration risks and stricter regulations continue to be the concerns.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Hercules Capital, Inc. Price, Consensus and EPS Surprise | Hercules Capital, Inc. Quote
Currently, Hercules Capital carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked finance stocks include:
Walker & Dunlop, Inc. (WD - Free Report) : Over the last 30 days, the Zacks Consensus Estimate for 2017 jumped 20.1% to $3.89. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Essent Group Ltd. (ESNT - Free Report) : The Zacks Consensus Estimate for 2017 climbed 6.7% to $2.88, over the past 30 days. The company boasts a Zacks Rank #1.
PJT Partners Inc. (PJT - Free Report) : Over the last 30 days, the Zacks Consensus Estimate for 2017 jumped 7.4% to $1.60. The company also flaunts a Zacks Rank #1.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest tickers for the entirety of 2017?
Who wouldn't? These 10 are painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. They are our primary picks to buy and hold. Be among the very first to see them >>