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Medley Capital (MCC) Incurs Loss in Q2, Stock Declines 7.1%

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Shares of Medley Capital Corporation (MCC - Free Report) lost 7.1%, following the release of its second-quarter fiscal 2020 results. The company reported net investment loss of 8 cents per share, wider than the Zacks Consensus Estimate loss per share of 3 cents. In the prior-year quarter, the company reported net investment loss per share of 19 cents.

Results were hurt by a decline in total investment income. However, lower expenses provided support to some extent. The portfolio activity remained decent during the quarter.

Net investment loss was $4.2 million, which compared with $10.6 million recorded in the prior-year quarter.

Total Investment Income & Expenses Decline

Total investment income was $5.3 million, down 57.9% year over year. The fall was due to a decline in all revenue components. The reported figure lagged the Zacks Consensus Estimate of $7.1 million.

Total expenses, net of management and incentive fee waive, declined 58.9% year over year to $9.5 million.

Balance Sheet Position Decent

As of Mar 31, 2020, the company’s cash and cash equivalents (including restricted cash) totaled $61.1 million, down from $84.3 million as of Sep 30, 2019.

Medley Capital’s total assets amounted to $318.5 million, down from $486.3 million recorded as of Sep 30, 2019.

Net asset value was $2.60 per share, down from $3.97 as of Sep 30, 2019.

Portfolio Activity Robust

The fair value of Medley Capital’s total investment portfolio was $255.9 million as of Mar 31, 2020.

In the reported quarter, the company originated $6.6 million of investments, and had $20.4 million of repayments and sales.

Our Take

Continued decent origination volumes are expected to aid Medley Capital’s growth. Moreover, lower expenses (as witnessed in the reported quarter) might aid the bottom line to some extent in the near term.

Medley Capital Corporation Price, Consensus and EPS Surprise
 

Medley Capital Corporation Price, Consensus and EPS Surprise

Medley Capital Corporation price-consensus-eps-surprise-chart | Medley Capital Corporation Quote

Currently, Medley Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Stocks

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.

Ares Capital Corporation’s (ARCC - Free Report) first-quarter 2020 core earnings of 41 cents per share missed the Zacks Consensus Estimate of 43 cents. Also, the bottom line declined 14.6% year over year.

SEI Investments Co.’s (SEIC - Free Report) first-quarter 2020 earnings of 72 cents per share lagged the Zacks Consensus Estimate of 77 cents. Moreover, the figure reflects a decline of 1.4% from the prior-year quarter.

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