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Blue Owl Capital Corporation (OBDC) Up 4.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Blue Owl Capital Corporation (OBDC - Free Report) . Shares have added about 4.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Blue Owl 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 the most recent earnings report in order to get a better handle on the important catalysts.
Blue Owl Capital Q3 Earnings Beat, Dividend Raised
Blue Owl Capital reported third-quarter 2023 earnings per share of 49 cents, which beat the Zacks Consensus Estimate by 4.3%. The bottom line also improved 32.4% year over year.
The total investment income of OBDC amounted to $399 million, which increased 27.1% year over year. The top line beat the Zacks Consensus Estimate by 1.9%.
The strong third-quarter results of OBDC were supported by growth in the portfolio, high interest rates and solid net investment income. However, the positives were partially offset by higher costs.
Q3 Update
Net investment income surged 29.5% year over year to $190.1 million, surpassing our estimate by 7.8%.
Total new investment commitments amounted to $500.2 million across seven new portfolio companies and six existing ones, marking a robust increase of 17% year over year.
Blue Owl Capital concluded the third quarter with investments in 187 portfolio companies, boasting an aggregate fair value of $12.9 billion. As of Sep 30, 2023, the average investment size in each portfolio company stood at $69 million.
Total operating expenses rose 24.5% year over year to $206.2 million in the third quarter, marginally exceeding our estimate. The increase was primarily driven by higher interest expenses, performance-based incentive fees and other general and administrative expenses.
The company reported a net income of $206.9 million in the third quarter, declining from $265.4 million in the year-ago period.
Financial Update (as of Sep 30, 2023)
Blue Owl Capital ended the third quarter with cash and restricted cash of $432 million, which declined from $445.1 million as of Dec 31, 2022. Total assets were $13.5 billion, down from $13.6 billion at 2022-end.
The debt stood at $7.1 billion, a decrease from $7.3 billion at 2022-end. OBDC still had $1.4 billion of undrawn capacity under its credit facilities.
Net cash from operating activities in the first nine months of 2023 was robust at $721.8 million compared with the prior year’s figure of $122.5 million.
At the end of the third quarter, net debt to equity was 1.13X, a slight improvement from 1.18x at the end of September 2022.
Dividend & Repurchase Update
The board of directors at Blue Owl Capital hiked the fourth-quarter 2023 basic dividend by 2 cents to 35 cents per share, payable on Jan 12, next year, to shareholders of record as of Dec 29, 2023. A third-quarter 2023 supplemental dividend of 8 cents per share was declared for stockholders, bringing the total third-quarter dividend to 41 cents.
OBDC brought in a share buyback program of $150 million on Nov 1, 2022, with a life span of 18 months. As of Sep 30, 2023, $50 million of OBDC stock was purchased. The company did not make share repurchases under this program in the third quarter, leaving it with a remaining fund of $100 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Blue Owl Capital Corporation has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Blue Owl Capital Corporation has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Blue Owl Capital Corporation is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Virtu Financial (VIRT - Free Report) , a stock from the same industry, has gained 5.7%. The company reported its results for the quarter ended September 2023 more than a month ago.
Virtu Financial reported revenues of $298.01 million in the last reported quarter, representing a year-over-year change of -10%. EPS of $0.45 for the same period compares with $0.61 a year ago.
For the current quarter, Virtu Financial is expected to post earnings of $0.49 per share, indicating a change of +32.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -6.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Virtu Financial. Also, the stock has a VGM Score of F.
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Blue Owl Capital Corporation (OBDC) Up 4.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Blue Owl Capital Corporation (OBDC - Free Report) . Shares have added about 4.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Blue Owl 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 the most recent earnings report in order to get a better handle on the important catalysts.
Blue Owl Capital Q3 Earnings Beat, Dividend Raised
Blue Owl Capital reported third-quarter 2023 earnings per share of 49 cents, which beat the Zacks Consensus Estimate by 4.3%. The bottom line also improved 32.4% year over year.
The total investment income of OBDC amounted to $399 million, which increased 27.1% year over year. The top line beat the Zacks Consensus Estimate by 1.9%.
The strong third-quarter results of OBDC were supported by growth in the portfolio, high interest rates and solid net investment income. However, the positives were partially offset by higher costs.
Q3 Update
Net investment income surged 29.5% year over year to $190.1 million, surpassing our estimate by 7.8%.
Total new investment commitments amounted to $500.2 million across seven new portfolio companies and six existing ones, marking a robust increase of 17% year over year.
Blue Owl Capital concluded the third quarter with investments in 187 portfolio companies, boasting an aggregate fair value of $12.9 billion. As of Sep 30, 2023, the average investment size in each portfolio company stood at $69 million.
Total operating expenses rose 24.5% year over year to $206.2 million in the third quarter, marginally exceeding our estimate. The increase was primarily driven by higher interest expenses, performance-based incentive fees and other general and administrative expenses.
The company reported a net income of $206.9 million in the third quarter, declining from $265.4 million in the year-ago period.
Financial Update (as of Sep 30, 2023)
Blue Owl Capital ended the third quarter with cash and restricted cash of $432 million, which declined from $445.1 million as of Dec 31, 2022. Total assets were $13.5 billion, down from $13.6 billion at 2022-end.
The debt stood at $7.1 billion, a decrease from $7.3 billion at 2022-end. OBDC still had $1.4 billion of undrawn capacity under its credit facilities.
Net cash from operating activities in the first nine months of 2023 was robust at $721.8 million compared with the prior year’s figure of $122.5 million.
At the end of the third quarter, net debt to equity was 1.13X, a slight improvement from 1.18x at the end of September 2022.
Dividend & Repurchase Update
The board of directors at Blue Owl Capital hiked the fourth-quarter 2023 basic dividend by 2 cents to 35 cents per share, payable on Jan 12, next year, to shareholders of record as of Dec 29, 2023. A third-quarter 2023 supplemental dividend of 8 cents per share was declared for stockholders, bringing the total third-quarter dividend to 41 cents.
OBDC brought in a share buyback program of $150 million on Nov 1, 2022, with a life span of 18 months. As of Sep 30, 2023, $50 million of OBDC stock was purchased. The company did not make share repurchases under this program in the third quarter, leaving it with a remaining fund of $100 million.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
VGM Scores
At this time, Blue Owl Capital Corporation has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Blue Owl Capital Corporation has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Blue Owl Capital Corporation is part of the Zacks Financial - Miscellaneous Services industry. Over the past month, Virtu Financial (VIRT - Free Report) , a stock from the same industry, has gained 5.7%. The company reported its results for the quarter ended September 2023 more than a month ago.
Virtu Financial reported revenues of $298.01 million in the last reported quarter, representing a year-over-year change of -10%. EPS of $0.45 for the same period compares with $0.61 a year ago.
For the current quarter, Virtu Financial is expected to post earnings of $0.49 per share, indicating a change of +32.4% from the year-ago quarter. The Zacks Consensus Estimate has changed -6.7% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Virtu Financial. Also, the stock has a VGM Score of F.