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FS KKR Capital's (FSK) Q2 Earnings Beat, Revenues Jump Y/Y

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FS KKR Capital Corp.’s (FSK - Free Report) second-quarter 2019 adjusted net investment income (NII) of 19 cents per share surpassed the Zacks Consensus Estimate by a penny. The bottom line was on par with the year-ago quarter figure.

Results reflect substantial increase in revenues and a strong balance sheet position. However, increase in expenses was an undermining factor.

NII (GAAP Basis) came in at $101 million, up from $46 million in the prior-year quarter.

Total Investment Income & Expenses Surge

Total investment income was $199 million, up significantly from $96 million in the year-ago period. Also, the figure exceeded the Zacks Consensus Estimate of $194.8 million.

Total operating expenses jumped 96% year over year to $98 million. Drastic surge in interest income was the primary reason for the increase.

The fair value of FS KKR Capital’s total investment portfolio was $7.3 billion as of Jun 30, 2019.

Balance Sheet Position

As of Jun 30, 2019, FS KKR Capital’s net asset value was $7.88 per share compared with $7.86 as of Mar 31, 2019.

The company had $7.7 billion in total assets and $4.1 billion in total stockholders’ equity as of Jun 30, 2019.

At the end of the second quarter, the debt/equity ratio was 0.77. Cash and foreign currency totaled $288 million as of Jun 30, 2019.

Our Take

Steady improvement in total investment income and strong origination volume will support FS KKR Capital’s profitability. However, considerable increase in operating expenses is a major concern.

FS Investment Corporation Price, Consensus and EPS Surprise

 

FS Investment Corporation Price, Consensus and EPS Surprise

FS Investment Corporation price-consensus-eps-surprise-chart | FS Investment Corporation Quote

Currently, FS KKR Capital carries a Zacks Rank #4 (Sell).  

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Results of Other Finance Stocks

Ares Capital Corporation’s (ARCC - Free Report) second-quarter 2019 core earnings of 49 cents per share surpassed the Zacks Consensus Estimate of 44 cents. Also, the bottom line grew 25.6% from the year-ago quarter.

Hercules Capital Inc.’s (HTGC - Free Report) second-quarter 2019 net investment income of 36 cents per share outpaced the Zacks Consensus Estimate of 33 cents. The bottom line also was 38.5% above the year-ago figure.

Capitala Finance Corp.’s (CPTA - Free Report) second-quarter 2019 net investment income per share of 25 cents was in line with the Zacks Consensus Estimate. The figure was 3.8% lower than the prior-year quarter’s number.

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