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Hercules Capital (HTGC) Up on Q3 Earnings Beat, Revenue Rise
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Shares of Hercules Capital Inc. (HTGC - Free Report) gained 4.3% in after-market trading following the release of its third-quarter 2022 results. The company’s net investment income of 39 cents per share surpassed the Zacks Consensus Estimate of 35 cents. The bottom line reflects a rise of 18.2% from the year-ago quarter.
Results were primarily aided by an increase in total investment income. Also, the balance sheet position remained strong and new commitments were robust. However, higher expenses hurt the results to some extent.
Net investment income was $50 million, up 31.3% year over year.
Total Investment Income Improves, Expenses Rise
Total investment income was $84.2 million, up 20% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $80 million.
Total gross operating expenses increased 7.9% year over year to $36.1 million. The rise was due to an increase in total employee compensation costs, general and administrative costs, interest expenses, and loan fees.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $2.83 billion as of Sep 30, 2022.
In the third quarter, the company delivered $817.2 million in gross new debt and equity commitments, and $307.1 million in gross new fundings. It realized early loan repayments of $124.5 million.
Balance Sheet Position Strong
As of Sep 30, 2022, Hercules Capital’s net asset value was $10.47 per share compared with $11.22 as of Dec 31, 2021.
As of Sep 30, 2022, the company had $700.1 million in liquidity, including $57.1 million of unrestricted cash and cash equivalents, and $643 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.4%, down from 4.9% at the end of the prior-year quarter.
Our Take
Hercules Capital’s loan origination activity continues to be on track, which is likely to support top-line growth in the quarters ahead. However, as the company continues to undertake efforts to improve originations, expenses are expected to remain elevated.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Ally Financial’s (ALLY - Free Report) third-quarter 2022 adjusted earnings of $1.12 per share lagged the Zacks Consensus Estimate of $1.73. The bottom line reflects a decline of 48.1% from the year-ago quarter. Our estimate for earnings was $1.75.
Results were primarily hurt by a rise in expenses, a decline in other revenues and higher provisions. However, an improvement in net financing revenues was an offsetting factor. ALLY witnessed a rise in loan balances in the reported quarter.
Capital One’s (COF - Free Report) third-quarter 2022 earnings of $4.20 per share lagged the Zacks Consensus Estimate of $5.03. The bottom line plunged 38% from the year-ago quarter.
COF’s results were adversely impacted by higher provisions for credit losses on the worsening macroeconomic environment and recessionary fears. Also, an increase in operating expenses acted as a headwind. Yet, a robust improvement in loan balances and higher interest rates aided net interest income for COF.
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Hercules Capital (HTGC) Up on Q3 Earnings Beat, Revenue Rise
Shares of Hercules Capital Inc. (HTGC - Free Report) gained 4.3% in after-market trading following the release of its third-quarter 2022 results. The company’s net investment income of 39 cents per share surpassed the Zacks Consensus Estimate of 35 cents. The bottom line reflects a rise of 18.2% from the year-ago quarter.
Results were primarily aided by an increase in total investment income. Also, the balance sheet position remained strong and new commitments were robust. However, higher expenses hurt the results to some extent.
Net investment income was $50 million, up 31.3% year over year.
Total Investment Income Improves, Expenses Rise
Total investment income was $84.2 million, up 20% from the year-ago quarter. The top line beat the Zacks Consensus Estimate of $80 million.
Total gross operating expenses increased 7.9% year over year to $36.1 million. The rise was due to an increase in total employee compensation costs, general and administrative costs, interest expenses, and loan fees.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $2.83 billion as of Sep 30, 2022.
In the third quarter, the company delivered $817.2 million in gross new debt and equity commitments, and $307.1 million in gross new fundings. It realized early loan repayments of $124.5 million.
Balance Sheet Position Strong
As of Sep 30, 2022, Hercules Capital’s net asset value was $10.47 per share compared with $11.22 as of Dec 31, 2021.
As of Sep 30, 2022, the company had $700.1 million in liquidity, including $57.1 million of unrestricted cash and cash equivalents, and $643 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.4%, down from 4.9% at the end of the prior-year quarter.
Our Take
Hercules Capital’s loan origination activity continues to be on track, which is likely to support top-line growth in the quarters ahead. However, as the company continues to undertake efforts to improve originations, expenses are expected to remain elevated.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Hercules Capital, Inc. price-consensus-eps-surprise-chart | Hercules Capital, Inc. Quote
Currently, Hercules 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 Companies
Ally Financial’s (ALLY - Free Report) third-quarter 2022 adjusted earnings of $1.12 per share lagged the Zacks Consensus Estimate of $1.73. The bottom line reflects a decline of 48.1% from the year-ago quarter. Our estimate for earnings was $1.75.
Results were primarily hurt by a rise in expenses, a decline in other revenues and higher provisions. However, an improvement in net financing revenues was an offsetting factor. ALLY witnessed a rise in loan balances in the reported quarter.
Capital One’s (COF - Free Report) third-quarter 2022 earnings of $4.20 per share lagged the Zacks Consensus Estimate of $5.03. The bottom line plunged 38% from the year-ago quarter.
COF’s results were adversely impacted by higher provisions for credit losses on the worsening macroeconomic environment and recessionary fears. Also, an increase in operating expenses acted as a headwind. Yet, a robust improvement in loan balances and higher interest rates aided net interest income for COF.