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Main Street (MAIN) Q3 Earnings Lag Estimates, Revenues Rise

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Main Street Capital Corporation’s (MAIN - Free Report) third-quarter 2019 net investment income of 62 cents per share lagged the Zacks Consensus Estimate by a penny. Also, the bottom line was down 1.6% from the year-ago figure.

The company’s third-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 $41.6 million compared with $40.2 million in the prior-year quarter.

Total Investment Income Up, Expenses Rise

Total investment income was $60.1 million, up 3% from the year-ago quarter. The upside was mainly driven by higher dividend income from investment portfolio equity investments. However, the top line lagged the Zacks Consensus Estimate of $61.4 million.

Total expenses jumped 4.3% year over year to $21.1 million. The increase was mainly due to higher interest expenses along with share-based compensation costs.

The fair value of Main Street’s total investment portfolio was $2.56 billion as of Sep 30, 2019.

Balance Sheet Position

As of Sep 30, 2019, Main Street’s net asset value was $24.20 per share compared with $24.09 on Dec 31, 2018.

As of Sep 30, 2019, the company had $52.3 million in cash and cash equivalents, $555 million of unused capacity under Credit Facility, with which it seeks to support investment and operating activities. Also, it had $35.2 million of remaining SBIC debenture capacity.

Our Take

Steady improvement in total investment income and strong origination volume are expected to 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

Newtek Business Services Corp.’s (NEWT - Free Report) third-quarter 2019 adjusted net investment income of 63 cents per share outpaced the Zacks Consensus Estimate of 57 cents. The bottom-line figure also jumped 26% year on year.

Prospect Capital Corporation’s (PSEC - Free Report) first-quarter fiscal 2020 (ended Sep 30) net investment income of 19 cents per share came in line with the Zacks Consensus Estimate. The bottom-line figure decreased 17.4%, year over year.

LendingTree (TREE - Free Report) delivered a positive earnings surprise of 34.7% in third-quarter 2019. Adjusted net income per share of $2.25 outpaced the Zacks Consensus Estimate of $1.67. Further, the figure came in higher than the prior-year quarter’s $1.92 per share.

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