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What's in Store for Hercules Capital (HTGC) in Q4 Earnings?

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Hercules Capital, Inc. HTGC is scheduled to announce fourth-quarter and 2019 results on Feb 20, after market open. Its revenues and earnings are likely to have improved in the quarter on a year-over-year basis.

In the last reported quarter, the company’s earnings surpassed the Zacks Consensus Estimate. Results benefited from an increase in total investment income, partly offset by higher expenses.

Hercules Capital has an impressive earnings surprise history. The company’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters, the average beat being 4.5%.

Hercules Capital, Inc. Price and EPS Surprise

Hercules Capital, Inc. Price and EPS Surprise

Hercules Capital, Inc. price-eps-surprise | Hercules Capital, Inc. Quote

However, activities of the company in the fourth quarter failed to win analysts’ confidence. As a result, the Zacks Consensus Estimate for its earnings of 36 cents for the to-be-reported quarter has been unchanged over the past 30 days. The figure indicates growth of 12.5% from the year-ago quarter’s reported number.

The consensus estimate for sales of $68.9 million for the fourth quarter suggests 21.1% growth on a year-over-year basis.

Key Estimates for Q4

Despite relatively lower interest rates, the company is expected to have benefited from an increase in total interest income (constituting more than 90% of its total investment income) in the quarter. The Zacks Consensus Estimate for total interest income is pegged at $65 million, suggesting nearly 2% rise from the prior quarter’s reported figure.

Notably, management expects $100 million in prepayment activity in the quarter. Also, for 2019, the company expects portfolio growth to exceed the high end of $300-$400 million.

Given the expectation of increase in activity in the quarter, borrowing costs are expected to have risen.

The company anticipates SG&A expenses of $16-$17 million.

Earnings Whispers

According to our quantitative model, it cannot be conclusively predicted whether Hercules Capital will be able to beat the Zacks Consensus Estimate this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESP and Zacks Rank #3 (Hold) or higher.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Hercules Capital has an Earnings ESP of 0.00%.

Zacks Rank: The company currently carries a Zacks Rank #3. While this increases the predictive power of ESP, we also need a positive ESP to be confident of an earnings beat.

Stocks That Warrant a Look

Cohen & Steers Inc.’s CNS Zacks Consensus Estimate for current-year earnings has been revised upward by 7.6% over the past 60 days. Moreover, the stock has rallied 12.9% in the past three months. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Legg Mason, Inc. has witnessed upward earnings estimate revision of 3% for the current fiscal year over the past 60 days. The company’s shares have gained 4.7% in the past three months. At present, the stock flaunts a Zacks Rank of 1.

The consensus estimate for earnings of Artisan Partners Asset Management Inc. APAM has been revised 6.7% upward for the current year over the past 60 days. The stock has gained 24.6% over the past three months. It currently sports a Zacks Rank #1.

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