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Hercules Capital (HTGC) Up on Q1 Earnings Beat, Revenue Rise
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Shares of Hercules Capital Inc. (HTGC - Free Report) gained 5.4% in after-market trading following the release of its first-quarter 2023 results. The company’s net investment income of 48 cents per share surpassed the Zacks Consensus Estimate of 46 cents. The bottom line reflects a rise of 60% from the year-ago quarter. Our estimate for the metric was 43 cents.
Results were primarily aided by an increase in the 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 $65.5 million, up 83% year over year. Our estimate for the metric was $56.1 million.
Total Investment Income Improves, Expenses Rise
Total investment income was $105.1 million, up 61.3% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $103 million. Our estimate for the metric was $95.2 million.
Total gross operating expenses increased 37.4% year over year to $42.3 million. The rise was due to an increase in all expense components, except for stock-based compensation costs. Our estimate for the metric was $41.6 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.13 billion as of Mar 31, 2023.
In the first quarter, the company delivered $526 million in gross new debt and equity commitments and $476.2 million in gross new funding. It realized early loan repayments of $202.4 million.
Balance Sheet Position Strong
As of Mar 31, 2023, Hercules Capital’s net asset value was $10.82 per share compared with $10.53 as of Dec 31, 2022.
As of Mar 31, 2023, the company had $553.1 million in liquidity, including $71.1 million of unrestricted cash and cash equivalents, and $482 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.7%, up from 4.0% 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 be elevated.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Ares Capital Corporation (ARCC - Free Report) reported first-quarter 2023 core earnings of 42 cents per share, which missed the Zacks Consensus Estimate of 59 cents by a wide margin. The bottom line also reflected a decline of 26.3% from the prior-year quarter. Our estimate for core earnings is 50 cents per share.
ARCC’s results were adversely impacted by a rise in expenses. Further, the company recorded lower gross commitments in the quarter. Then again, higher revenues offered some support to ARCC.
Federated Hermes, Inc.’s (FHI - Free Report) first-quarter 2023 earnings per share of 78 cents outpaced the Zacks Consensus Estimate of 74 cents. The bottom line reflects a rise of 28% from the year-ago quarter.
Increases in net investment advisory fees, net administrative service fees and net other service fees were the major driving factors for FHI. However, a decline in equity and alternative/private market assets, along with a rise in expenses, hurt the results to some extent.
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Hercules Capital (HTGC) Up on Q1 Earnings Beat, Revenue Rise
Shares of Hercules Capital Inc. (HTGC - Free Report) gained 5.4% in after-market trading following the release of its first-quarter 2023 results. The company’s net investment income of 48 cents per share surpassed the Zacks Consensus Estimate of 46 cents. The bottom line reflects a rise of 60% from the year-ago quarter. Our estimate for the metric was 43 cents.
Results were primarily aided by an increase in the 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 $65.5 million, up 83% year over year. Our estimate for the metric was $56.1 million.
Total Investment Income Improves, Expenses Rise
Total investment income was $105.1 million, up 61.3% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $103 million. Our estimate for the metric was $95.2 million.
Total gross operating expenses increased 37.4% year over year to $42.3 million. The rise was due to an increase in all expense components, except for stock-based compensation costs. Our estimate for the metric was $41.6 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.13 billion as of Mar 31, 2023.
In the first quarter, the company delivered $526 million in gross new debt and equity commitments and $476.2 million in gross new funding. It realized early loan repayments of $202.4 million.
Balance Sheet Position Strong
As of Mar 31, 2023, Hercules Capital’s net asset value was $10.82 per share compared with $10.53 as of Dec 31, 2022.
As of Mar 31, 2023, the company had $553.1 million in liquidity, including $71.1 million of unrestricted cash and cash equivalents, and $482 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.7%, up from 4.0% 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 be 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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Ares Capital Corporation (ARCC - Free Report) reported first-quarter 2023 core earnings of 42 cents per share, which missed the Zacks Consensus Estimate of 59 cents by a wide margin. The bottom line also reflected a decline of 26.3% from the prior-year quarter. Our estimate for core earnings is 50 cents per share.
ARCC’s results were adversely impacted by a rise in expenses. Further, the company recorded lower gross commitments in the quarter. Then again, higher revenues offered some support to ARCC.
Federated Hermes, Inc.’s (FHI - Free Report) first-quarter 2023 earnings per share of 78 cents outpaced the Zacks Consensus Estimate of 74 cents. The bottom line reflects a rise of 28% from the year-ago quarter.
Increases in net investment advisory fees, net administrative service fees and net other service fees were the major driving factors for FHI. However, a decline in equity and alternative/private market assets, along with a rise in expenses, hurt the results to some extent.