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Here's Why You Should Stay Away From Owl Rock Capital (ORCC)
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Owl Rock Capital Corporation has been suffering a while now due to coronavirus-induced business loss, which stemmed from the ongoing economic distress in the financial markets.
The company's earnings missed estimates in three of the trailing four trailing quarters (beating the mark in one), the average negative surprise being of 3.3%.
What’s Bothering the Stock?
The company has been witnessing a steep expense level over the past few years, which is a persistent concern. In 2019 and during the first six months of 2020, the same rose 104% and 81% year over year, respectively. We expect this trend to continue due to steady investments. A rise in expenses might continue to put pressure on the company’s margins.
On the last reported quarter’s earnings call, management had noted that due to a sharp decline in LIBOR of late, the company is also likely to witness suppressed interest income in the third quarter before it flattens out. In the first six months of 2020, interest income of the company dropped 20% year over year.
Although Owl Rock Capital boasted a strong portfolio of investments in companies consisting of several new commitments, the metric has been declining since 2019 after a few solid years. In the first six months of 2020, the same plunged 64% year over year, which remains a huge downside for the company.
Its return on equity — a profitability measure — stands at 9.7%, much lower than the industry's average of 18.4%. This reflects the company’s relative inefficiency in utilizing its shareholders’ funds.
The Zacks Consensus Estimate for current-year earnings is pegged at $1.34, indicating a downside of 13% from the year-ago reported figure.
Zacks Rank and Price Performance
Shares of this currently Zacks Rank #4 (Sell) company have lost 16.6% in a year’s time, wider than the industry’s decline of 1.6%.
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Here's Why You Should Stay Away From Owl Rock Capital (ORCC)
Owl Rock Capital Corporation has been suffering a while now due to coronavirus-induced business loss, which stemmed from the ongoing economic distress in the financial markets.
The company's earnings missed estimates in three of the trailing four trailing quarters (beating the mark in one), the average negative surprise being of 3.3%.
What’s Bothering the Stock?
The company has been witnessing a steep expense level over the past few years, which is a persistent concern. In 2019 and during the first six months of 2020, the same rose 104% and 81% year over year, respectively. We expect this trend to continue due to steady investments. A rise in expenses might continue to put pressure on the company’s margins.
On the last reported quarter’s earnings call, management had noted that due to a sharp decline in LIBOR of late, the company is also likely to witness suppressed interest income in the third quarter before it flattens out. In the first six months of 2020, interest income of the company dropped 20% year over year.
Although Owl Rock Capital boasted a strong portfolio of investments in companies consisting of several new commitments, the metric has been declining since 2019 after a few solid years. In the first six months of 2020, the same plunged 64% year over year, which remains a huge downside for the company.
Its return on equity — a profitability measure — stands at 9.7%, much lower than the industry's average of 18.4%. This reflects the company’s relative inefficiency in utilizing its shareholders’ funds.
The Zacks Consensus Estimate for current-year earnings is pegged at $1.34, indicating a downside of 13% from the year-ago reported figure.
Zacks Rank and Price Performance
Shares of this currently Zacks Rank #4 (Sell) company have lost 16.6% in a year’s time, wider than the industry’s decline of 1.6%.
Other companies in the same space, such as TCG BDC, Inc. (CGBD - Free Report) and FEDNAT HOLDING CO have also decreased 22.8% and 56.4%, respectively, while Moodys Corporation (MCO - Free Report) has gained 41.3% over the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>