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Owl Rock Capital Corporation (ORCC) Up 0.4% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Owl Rock Capital Corporation (ORCC - Free Report) . Shares have added about 0.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Owl Rock Capital Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Owl Rock Capital's Q2 Earnings Beat Estimates

Owl Rock Capital reported second-quarter 2022 earnings per share of 32 cents, which beat the Zacks Consensus Estimate by a penny. The bottom line also improved from 30 cents a year ago.

The total investment income of ORCC amounted to $273.3 million, which climbed from $249 million a year ago. Also, the figure beat the consensus mark by 2.9%.

Q2 Update

Net investment income rose to $125.1 million from $119.1 million a year ago.

New investment commitments were $603.4 million across 16 new portfolio companies and existing 10 portfolio companies. The metric plunged 61.8% year over year in the quarter under review.

Owl Rock Capital ended the second quarter with investments in 168 portfolio companies, backed with an aggregate fair value of $12.6 billion. Based on the fair value, the average investment size in each portfolio company was $75.3 million as of Jun 30, 2022.

Total expenses escalated nearly 13% year over year to $146.6 million in the second quarter.

It recorded a net loss of $34.9 million in the second quarter against a net income of $150.2 million in the prior-year quarter.

Financial Update (as of Jun 30, 2022)

Owl Rock Capital exited the second quarter with cash and restricted cash of $343.3 million, which declined from $447.1 million as of Dec 31, 2021. Total assets of $13.1 billion slipped from $13.3 billion at 2021-end.

Debt was at $7.1 billion, in line with 2021-end. ORCC had $1.4 billion of undrawn capacity under its credit facilities. It currently has no debt maturities until April 2024.

Net cash used in operating activities during the first half was $74.7 million compared with the prior-year quarter’s cash usage of $574.4 million.

At the quarter-end, debt to equity was at 1.20X.

Dividend Update

The board of directors at Owl Rock Capital approved a third-quarter dividend of 31 cents per share. The dividend will be paid out on or before Nov 15, 2022, to shareholders of record as of Sep 30, 2022.

Outlook

As most of Owl Rock Capital’s assets are floating in nature, an improving interest rate environment is projected to drive net investment income in the second half of 2022. The volatile market conditions are also expected to provide ORCC with direct lending opportunities.

How Have Estimates Been Moving Since Then?

It turns out, estimates review have trended upward during the past month.

VGM Scores

Currently, Owl Rock Capital Corporation has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Owl Rock Capital Corporation has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.


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