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Main Street (MAIN) Q2 Earnings Beat Estimates, Revenues Rise

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Main Street Capital Corporation’s (MAIN - Free Report) second-quarter 2019 net investment income of 63 cents per share outpaced the Zacks Consensus Estimate by a penny. However, the bottom line was down 4.5% from the year-ago figure.

The company’s second-quarter results benefited from higher total investment income. Also, increase in net asset value and growth in investment portfolio were tailwinds. However, rise in operating expenses was an undermining factor.

Distributional net operating income came in at $42 million or 67 cents per share compared with $41.9 million or 70 cents per share in the prior-year quarter.

Total Investment Income Up, Expenses Rise

Total investment income was $61.3 million, up 2% from the year-ago quarter. The upside was mainly driven by increase in interest income, primarily related to higher average levels of investment portfolio debt investments and an increase in the average effective yields. The top line matched the Zacks Consensus Estimate.

Total expenses jumped 6.5% year over year to $21.7 million. The increase was mainly due to higher interest expenses along with general and administrative costs.

The fair value of Main Street’s total investment portfolio was $2.33 billion as of Jun 30, 2019.

Balance Sheet Position

As of Jun 30, 2019, Main Street’s net asset value was $24.17 per share compared with $24.09 on Dec 31, 2018.

As of Jun 30, 2019, the company had $70.5 million in cash and cash equivalents, $583.0 million of unused capacity under Credit Facility, with which it seeks to support investment and operating activities. Also, it had $25.2 million of remaining SBIC debenture capacity.

Our Take

Steady improvement in total investment income and strong origination volume will support this Zacks Rank #3 (Hold) company’s bottom line. However, increase in operating expenses is a major concern.

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

Main Street Capital Corporation Price, Consensus and EPS Surprise

Performance of Other Finance Stocks

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.

FS KKR Capital Corp.’s (FSK - Free Report) second-quarter 2019 adjusted net investment income 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.

Capitala Finance Corp.’s 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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