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Hercules Capital (HTGC) Gains on Q2 Earnings & Revenue Beat
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Shares of Hercules Capital Inc. (HTGC - Free Report) gained 1% in after-market trading in response to better-than-expected second-quarter 2023 results. Net investment income of 53 cents per share outpaced the Zacks Consensus Estimate of 50 cents. The bottom line reflects a rise of 66% from the year-ago quarter.
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 $75.7 million, up 89% year over year. Our estimate for the metric was $62.2 million.
Total Investment Income Improves, Expenses Rise
Total investment income was $116.2 million, jumping 61% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $107.9 million.
Total gross operating expenses increased 23% to $42.9 million. The rise was due to an increase in all expense components except for stock-based compensation costs. Our estimate for the metric was $41.2 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.11 billion as of Jun 30, 2023.
In the second quarter, the company delivered $541.5 million in gross new debt and equity commitments and $358.6 million in gross new funding. It realized early loan repayments of $297 million.
Balance Sheet Position Strong
As of Jun 30, 2023, Hercules Capital’s net asset value was $10.96 per share compared with $10.53 as of Dec 31, 2022.
As of Jun 30, 2023, the company had $670.7 million in liquidity, including $61.7 million of unrestricted cash and cash equivalents, and $609 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.8%, up from 4.0% at the end of the prior-year quarter.
Our View
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 undertakes efforts to improve originations, expenses are expected to be elevated.
Hercules Capital, Inc. Price, Consensus and EPS Surprise
Performance & Earnings Release Date of Other Industry Players
Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2023 core earnings of 58 cents per share surpassed the Zacks Consensus Estimate by a penny. The bottom line also reflected a rise of 26.1% from the prior-year quarter.
ARCC’s results were primarily aided by an improvement in total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt the results to some extent.
PennantPark Floating Rate Capital Ltd. (PFLT - Free Report) is scheduled to announce quarterly numbers on Aug 9.
Over the past seven days, the Zacks Consensus Estimate for Hercules Capital’s second-quarter earnings has been unchanged at 33 cents. The estimate indicates a rise of 13.8% from the prior-year quarter’s reported number.
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Hercules Capital (HTGC) Gains on Q2 Earnings & Revenue Beat
Shares of Hercules Capital Inc. (HTGC - Free Report) gained 1% in after-market trading in response to better-than-expected second-quarter 2023 results. Net investment income of 53 cents per share outpaced the Zacks Consensus Estimate of 50 cents. The bottom line reflects a rise of 66% from the year-ago quarter.
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 $75.7 million, up 89% year over year. Our estimate for the metric was $62.2 million.
Total Investment Income Improves, Expenses Rise
Total investment income was $116.2 million, jumping 61% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $107.9 million.
Total gross operating expenses increased 23% to $42.9 million. The rise was due to an increase in all expense components except for stock-based compensation costs. Our estimate for the metric was $41.2 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.11 billion as of Jun 30, 2023.
In the second quarter, the company delivered $541.5 million in gross new debt and equity commitments and $358.6 million in gross new funding. It realized early loan repayments of $297 million.
Balance Sheet Position Strong
As of Jun 30, 2023, Hercules Capital’s net asset value was $10.96 per share compared with $10.53 as of Dec 31, 2022.
As of Jun 30, 2023, the company had $670.7 million in liquidity, including $61.7 million of unrestricted cash and cash equivalents, and $609 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.8%, up from 4.0% at the end of the prior-year quarter.
Our View
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 undertakes 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 #3 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Release Date of Other Industry Players
Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2023 core earnings of 58 cents per share surpassed the Zacks Consensus Estimate by a penny. The bottom line also reflected a rise of 26.1% from the prior-year quarter.
ARCC’s results were primarily aided by an improvement in total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt the results to some extent.
PennantPark Floating Rate Capital Ltd. (PFLT - Free Report) is scheduled to announce quarterly numbers on Aug 9.
Over the past seven days, the Zacks Consensus Estimate for Hercules Capital’s second-quarter earnings has been unchanged at 33 cents. The estimate indicates a rise of 13.8% from the prior-year quarter’s reported number.