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Hercules Capital (HTGC) Q4 Earnings Beat on Lower Expenses
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Hercules Capital Inc.’s (HTGC - Free Report) fourth-quarter 2023 net investment income of 56 cents per share outpaced the Zacks Consensus Estimate of 50 cents. The bottom line reflects a rise of 38.5% from the year-ago quarter.
Results were primarily aided by an increase in the total investment income and lower expenses. Also, the balance sheet position remained strong and new commitments were robust.
Net investment income was $86 million, up 38.5% year over year. Our estimate for the metric was $72.2 million.
For 2023, net investment income was $304 million or $2.09 per share, up from $188.1 million or $1.48 per share in 2022.
Total Investment Income Improves, Expenses Down
Total investment income in the quarter was $122.6 million, jumping 22.4% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $116 million.
For 2023, total investment income jumped 43.2% to $460.7 million. The top line also surpassed the consensus estimate of $454 million.
Total gross operating expenses decreased 4.7% year over year to $38.2 million. The fall was due to lower total employee compensation costs. Our estimate for the metric was $44.3 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.25 billion as of Dec 31, 2023.
In the fourth quarter, the company delivered $413.9 million in gross new debt and equity commitments, and $307 million in gross new funding. It realized early loan repayments of $277.7 million.
Balance Sheet Position Strong
As of Dec 31, 2023, Hercules Capital’s net asset value was $11.43 per share compared with $10.53 as of Dec 31, 2022.
As of Dec 31, 2023, the company had $743.9 million in liquidity, including $98.9 million of unrestricted cash and cash equivalents, and $645 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.9%, up from 4.6% 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
Ares Capital Corporation’s (ARCC - Free Report) fourth-quarter 2023 core earnings of 63 cents per share surpassed the Zacks Consensus Estimate of 59 cents. The bottom line matched the prior-year quarter’s figure.
Results were primarily aided by an improvement in the total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt ARCC’s results to some extent.
The Carlyle Group Inc.’s (CG - Free Report) fourth-quarter 2023 post-tax distributable earnings per share of 86 cents beat the Zacks Consensus Estimate of 75 cents. However, the bottom line declined from $1.01 in the year-ago quarter.
CG’s results benefited from an increase in segment fee revenues and lower expenses. Further, a rise in assets under management balance acted as a tailwind. However, a fall in realized performance revenues was the undermining factor.
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Hercules Capital (HTGC) Q4 Earnings Beat on Lower Expenses
Hercules Capital Inc.’s (HTGC - Free Report) fourth-quarter 2023 net investment income of 56 cents per share outpaced the Zacks Consensus Estimate of 50 cents. The bottom line reflects a rise of 38.5% from the year-ago quarter.
Results were primarily aided by an increase in the total investment income and lower expenses. Also, the balance sheet position remained strong and new commitments were robust.
Net investment income was $86 million, up 38.5% year over year. Our estimate for the metric was $72.2 million.
For 2023, net investment income was $304 million or $2.09 per share, up from $188.1 million or $1.48 per share in 2022.
Total Investment Income Improves, Expenses Down
Total investment income in the quarter was $122.6 million, jumping 22.4% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $116 million.
For 2023, total investment income jumped 43.2% to $460.7 million. The top line also surpassed the consensus estimate of $454 million.
Total gross operating expenses decreased 4.7% year over year to $38.2 million. The fall was due to lower total employee compensation costs. Our estimate for the metric was $44.3 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.25 billion as of Dec 31, 2023.
In the fourth quarter, the company delivered $413.9 million in gross new debt and equity commitments, and $307 million in gross new funding. It realized early loan repayments of $277.7 million.
Balance Sheet Position Strong
As of Dec 31, 2023, Hercules Capital’s net asset value was $11.43 per share compared with $10.53 as of Dec 31, 2022.
As of Dec 31, 2023, the company had $743.9 million in liquidity, including $98.9 million of unrestricted cash and cash equivalents, and $645 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.9%, up from 4.6% 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 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Companies
Ares Capital Corporation’s (ARCC - Free Report) fourth-quarter 2023 core earnings of 63 cents per share surpassed the Zacks Consensus Estimate of 59 cents. The bottom line matched the prior-year quarter’s figure.
Results were primarily aided by an improvement in the total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt ARCC’s results to some extent.
The Carlyle Group Inc.’s (CG - Free Report) fourth-quarter 2023 post-tax distributable earnings per share of 86 cents beat the Zacks Consensus Estimate of 75 cents. However, the bottom line declined from $1.01 in the year-ago quarter.
CG’s results benefited from an increase in segment fee revenues and lower expenses. Further, a rise in assets under management balance acted as a tailwind. However, a fall in realized performance revenues was the undermining factor.