Owl Rock Capital Corporation (ORCC - Free Report) has been in the investor’s good books on the back of its growing top line and a solid capital position.
The company ended 2019 with 98 portfolio companies, the average investment size in each portfolio company being $89.8 million based on fair value.
For 2019, total investment income of the company was $718 million, up 84.6% from the 2018-end level. This upside can be attributed to a higher investment portfolio.
Its return-on-assets (ROA) reflect growth potential. The company’s trailing 12-month ROA of 6.2% compares favorably with the industry average of 3.3%, reflecting its efficiency in utilizing its shareholders’ funds.
Now let’s see what has been working in the stock’s favor.
The company has been witnessing strong revenue growth since its inception in 2015 on the back of higher interest income. In fact, its top line saw a 2016-2019 CAGR of 195%, which is impressive. The upside can be attributable to higher interest income. A steady rise in revenues, primarily from the company’s rapidly-growing interest income and growth strategies, is likely to pave the way for long-term growth.
Owl Rock Capital also boasts a solid portfolio of investments in companies consisting of several new commitments. This positivity is evident from its new investment commitments’ CAGR of 127.9% during the 2016-2018 period. Although the same declined to some extent in 2019, the company’s commitment to new portfolio companies remains encouraging. This basically reflects its commitments to a particular portfolio company and has a favorable effect on Owl Rock Capital's net assets.
It is well-equipped with a strong capital position for effective deployment to make dividend payments and enhance shareholder value. Moreover, its leverage ratio (total debt to equity) stands at 50.8%, much lower than its industry's average of 174.7%. It also came up with a 10b5-1 buyback program. The company’s board approved six consecutive quarterly special dividends, which commenced in the third quarter of 2019 and will run through the fourth quarter of 2020. This mirrors its adequate financial flexibility.
For 2020, its earnings estimates are pegged at $1.55, indicating a hike of 0.7% from the year-ago reported quarter on revenues of $946.7 million, implying a 31.9% surge from the prior-year reported number.
Shares of this Zacks Rank #3 (Hold) have lost 34.8% in a year's time, wider than its industry’s decline of 31.6%. This looks better than the price performance of other companies in the same space, such as, TCG BDC, Inc. (CGBD - Free Report) , On Deck Capital, Inc. (ONDK - Free Report) and FEDNAT HOLDING CO (FNHC - Free Report) , which have lost 63%, 76.2%, 35%, respectively, over the same time frame. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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