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Hercules Capital (HTGC) Q1 Earnings Beat on Higher Revenues

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Hercules Capital Inc.’s (HTGC - Free Report) first-quarter 2020 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate by a penny. The bottom line also grew 23.3% from the year-ago reported figure.

The results reflect higher total investment income and a strong balance sheet position. However, a rise in operating expenses acted as a headwind.

Net investment income was $40.6 million, up 39.8% from the prior-year quarter.

Total Investment Income & Expenses Rise

Total investment income was $73.6 million, up 25.2% from the year-ago quarter. The upside was mainly driven by a higher average debt investment balance and rise in income from acceleration due to early loan repayments. The top line beat the Zacks Consensus Estimate of $69.8 million.

Total quarterly operating expenses increased 11% year over year to $33 million. The increase resulted from a rise in all expense components, except stock-based compensation costs.

Solid Portfolio Value & New Commitments

The fair value of Hercules Capital’s total investment portfolio was $2.3 billion as of Mar 31, 2020.

In the reported quarter, the company provided $256.8 million in new debt and equity commitments, as well as realized early loan repayments of $150.5 million.

Strong Balance Sheet Position

As of Mar 31, 2020, Hercules Capital’s net asset value was $9.92 per share compared with $10.55 on Dec 31, 2019.

The company had $438.2 million in liquidity — including $34.3 million of unrestricted cash and cash equivalents, and $403.9 million in credit facilities — as of Mar 31, 2020.

At the end of the first quarter, the weighted average cost of debt — comprising interest and fees — was 5.2%, down from 5.9% at the end of the prior-year quarter.

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. Further, lower rates remain a matter of concern.

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.

Earnings Release Date of Other Finance Stocks

FS KKR Capital Corp. (FSK - Free Report) , KKR & Co. Inc. (KKR - Free Report) and TriplePoint Venture Growth BDC Corp. (TPVG - Free Report) are scheduled to announce quarterly numbers on May 6.

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