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Medley Capital (MCC) Posts Narrower-Than-Expected Q3 Loss

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Medley Capital Corporation’s third-quarter fiscal 2020 (ended Jun 30) net investment loss was 26 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of $1.00. In the prior-year quarter, the company reported net investment loss of $1.40.

The results reflect a decline in total investment income and lower expenses. Further, portfolio activity remained decent during the quarter.

Net investment loss was $719 million compared with $3.8 billion loss recorded in the prior-year quarter.

Total Investment Income & Expenses Decline

Total investment income was $4.3 million, down 62.2% year over year. The fall was due to a decline in all revenue components.

Total expenses, net of management and incentive fee waive, declined 67% year over year to $5 million.

Decent Balance Sheet Position

As of Jun 30, 2020, the company’s cash and cash equivalents (including restricted cash) totaled $52.2 million, down from $84.3 million on Sep 30, 2019.

Further, as of Jun 30, 2020, Medley Capital had $74.0 million outstanding in aggregate principal amount of 6.50% unsecured notes due 2021 and $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.

During the quarter, it repaid the remaining $21.1 million Israeli Notes.

Medley Capital’s total assets amounted to $306.9 million, down from $486.3 million recorded as of Sep 30, 2019.

Net asset value was $54.83 per share, down from $79.46 as of Sep 30, 2019.

Modest Portfolio Activity

The fair value of Medley Capital’s total investment portfolio was $250.6 million as of Jun 30, 2020.

In the reported quarter, the company originated $2.9 million of investments, and had $17.3 million of repayments and sales.

Dividend Update

The board of directors of Medley Capital did not declare quarterly dividend for third-quarter fiscal 2020.

Major Development

Subsequent to the closing of the fiscal third quarter, Medley Capital completed a one-for-twenty reverse stock split on Jul 24, 2020.

Our Take

Continued decent origination volumes are expected to aid Medley Capital’s growth. Moreover, lower expenses (as witnessed in the reported quarter) might aid the bottom line to some extent in the near term.

Medley Capital Corporation Price, Consensus and EPS Surprise

Medley Capital Corporation Price, Consensus and EPS Surprise

Medley Capital Corporation price-consensus-eps-surprise-chart | Medley Capital Corporation Quote

Currently, Medley Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

Hercules Capital Inc.’s (HTGC - Free Report) second-quarter 2020 net investment income of 32 cents per share lagged the Zacks Consensus Estimate by a penny. The bottom line also declined 11.1% from the year-ago reported figure.

Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2020 core earnings of 39 cents per share beat the Zacks Consensus Estimate by a penny. However, the bottom line declined 20.4% year over year.

TriplePoint Venture Growth BDC Corp.’s (TPVG - Free Report) second-quarter 2020 net investment income of 38 cents per share surpassed the Zacks Consensus Estimate of 36 cents. However, the bottom line declined 7% from the year-ago quarter.

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