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Hercules Capital (HTGC) Q3 Earnings Beat on Higher Revenues

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Hercules Capital Inc.’s HTGC third-quarter 2019 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate of 34 cents. The bottom line grew 19.4% from the year-ago figure.

Results benefited from higher total investment income and an increase in net asset. However, rise in operating expenses acted as a headwind.

Distributional net operating income was $40.3 million or 39 cents per share, up from $32.6 million or 34 cents per share in the prior-year quarter.

Total Investment Income Improves, Expenses Rise

Total investment income was $69.2 million, up 31.6% from the year-ago quarter. The upside was mainly driven by a higher average debt investment balance and rise in income from acceleration from early loan repayments. The top line beat the Zacks Consensus Estimate of $67.5 million.

Total operating expenses jumped 30.3% year over year to $30.4 million. The increase mainly resulted from higher interest expenses, general and administrative costs, and total employee-compensation costs.

Total Portfolio Value & New Commitments

The fair value of Hercules Capital’s total investment portfolio was $2.2 billion as of Sep 30, 2019.

In the reported quarter, the company provided $241.3 million in new debt and equity commitments.

Balance Sheet Position

As of Sep 30, 2019, Hercules Capital’s net asset value was $10.38 per share compared with $9.90 on Dec 31, 2018.

The company had $284.5 million in liquidity, including $21.1 million in unrestricted cash and cash equivalents, and $263.4 million in credit facilities, as of Sep 30, 2019.

At the end of the third quarter, the weighted average cost of debt, comprising interest and fees, was 5.1%, down from 5.6% from the prior-year quarter end.

Our Take

Hercules Capital’s loan origination activity continues to be on track. However, elevated expense levels might hurt the bottom line to some extent.

Hercules Capital, Inc. Price, Consensus and EPS Surprise

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 & Earnings Release Dates of Other Finance Stocks

Ares Capital Corporation’s (ARCC - Free Report) third-quarter 2019 core earnings of 48 cents per share surpassed the Zacks Consensus Estimate of 46 cents. Also, the bottom line rose 6.7% from the year-ago quarter.

Capitala Finance Corp. CPTA and FS KKR Capital Corp. FSK are scheduled to announce results on Nov 4 and Nov 7, respectively.

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