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Hercules Capital (HTGC) Q1 Earnings & Revenues Lag Estimates
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Hercules Capital, Inc.’s (HTGC - Free Report) first-quarter 2017 net investment income of 28 cents per share lagged the Zacks Consensus Estimate by a penny. However, the figure reflected a rise of 12.8% from the year-ago quarter.
Lower-than-expected results were attributable to a rise in expenses, partially offset by higher total investment income. While a sound liquidity position and growth in investment portfolio remained impressive, a fall in net asset value was on the downside.
Distributional Net Operating Income for the quarter came in at $24.5 million or 30 cents per share compared with $22.7 million or 32 cents per share in the prior-year quarter.
Total Investment Income Improves, Expenses Rise
Total investment income in the reported quarter was $46.4 million, up 19.3% 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. However, the figure missed the Zacks Consensus Estimate of $48.3 million.
Total operating expenses rose 25.7% year over year to $23.7 million. The rise was largely led by an increase in interest and loan fees.
Total Portfolio Value & New Commitments
The fair value of Hercules Capital’s total investment portfolio was $1.41 billion as of Mar 31, 2017. In the reported quarter, the company provided approximately $191 million in new debt and equity-financing commitments to new and existing portfolio companies.
Balance Sheet
As of Mar 31, 2017, Hercules Capital’s net asset value was $9.76 per share compared with $9.90 as of Dec 31, 2016. The company had $343.1 million in liquidity, including $148.1 million in unrestricted cash and cash equivalents and $195 million in credit facilities as of Mar 31, 2017.
At the end of the first quarter, the weighted average cost of debt, comprising interest and fees was 6.3%, up 5.5% in the prior-year quarter. The increase was mainly due to the one-time, non-cash acceleration of unamortized fees due to the redemption of 2019 Notes. Adjusted weighted average cost of borrowings was 5.7%.
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. However, elevated expense levels owing to its efforts to enhance originations are expected to hurt the bottom line. Also, threat of concentration risks and stricter regulations continue to be the concerns. The proposed restructuring plan, seeking shareholders’ approval makes us apprehensive about future bottom-line growth.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Some stocks in the same industry including PennantPark Investment Corporation (PNNT - Free Report) , Garrison Capital Inc. and FS Investment Corporation are scheduled to announce results on May 8, May 9 and May 10, respectively.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>
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Hercules Capital (HTGC) Q1 Earnings & Revenues Lag Estimates
Hercules Capital, Inc.’s (HTGC - Free Report) first-quarter 2017 net investment income of 28 cents per share lagged the Zacks Consensus Estimate by a penny. However, the figure reflected a rise of 12.8% from the year-ago quarter.
Lower-than-expected results were attributable to a rise in expenses, partially offset by higher total investment income. While a sound liquidity position and growth in investment portfolio remained impressive, a fall in net asset value was on the downside.
Distributional Net Operating Income for the quarter came in at $24.5 million or 30 cents per share compared with $22.7 million or 32 cents per share in the prior-year quarter.
Total Investment Income Improves, Expenses Rise
Total investment income in the reported quarter was $46.4 million, up 19.3% 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. However, the figure missed the Zacks Consensus Estimate of $48.3 million.
Total operating expenses rose 25.7% year over year to $23.7 million. The rise was largely led by an increase in interest and loan fees.
Total Portfolio Value & New Commitments
The fair value of Hercules Capital’s total investment portfolio was $1.41 billion as of Mar 31, 2017. In the reported quarter, the company provided approximately $191 million in new debt and equity-financing commitments to new and existing portfolio companies.
Balance Sheet
As of Mar 31, 2017, Hercules Capital’s net asset value was $9.76 per share compared with $9.90 as of Dec 31, 2016. The company had $343.1 million in liquidity, including $148.1 million in unrestricted cash and cash equivalents and $195 million in credit facilities as of Mar 31, 2017.
At the end of the first quarter, the weighted average cost of debt, comprising interest and fees was 6.3%, up 5.5% in the prior-year quarter. The increase was mainly due to the one-time, non-cash acceleration of unamortized fees due to the redemption of 2019 Notes. Adjusted weighted average cost of borrowings was 5.7%.
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. However, elevated expense levels owing to its efforts to enhance originations are expected to hurt the bottom line. Also, threat of concentration risks and stricter regulations continue to be the concerns. The proposed restructuring plan, seeking shareholders’ approval makes us apprehensive about future bottom-line growth.
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 #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some stocks in the same industry including PennantPark Investment Corporation (PNNT - Free Report) , Garrison Capital Inc. and FS Investment Corporation are scheduled to announce results on May 8, May 9 and May 10, respectively.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>