Does Hercules Capital Inc’s (NYSE:HTGC) Past Performance Indicate A Stronger Future?
Assessing Hercules Capital Inc’s (NYSE:HTGC) past track record of performance is a useful exercise for investors. It allows us to understand whether the company has met or exceed expectations, which is a great indicator for future performance. Below, I assess HTGC’s latest performance announced on 30 September 2017 and evaluate these figures to its historical trend and industry movements. View our latest analysis for Hercules Capital
How HTGC fared against its long-term earnings performance and its industry
I like to use the ‘latest twelve-month’ data, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This blend enables me to examine many different companies on a similar basis, using new information. For Hercules Capital, its most recent bottom-line (trailing twelve month) is US$74.01M, which, relative to the prior year’s level, has increased by a fairly subdued 9.68%. Given that these figures are somewhat nearsighted, I have estimated an annualized five-year value for Hercules Capital’s net income, which stands at US$58.14M This means that, generally, Hercules Capital has been able to increasingly grow its bottom line over the past couple of years as well.
How has it been able to do this? Let’s see whether it is only owing to industry tailwinds, or if Hercules Capital has experienced some company-specific growth. The climb in earnings seems to be supported by a substantial top-line increase overtaking its growth rate of expenses. Though this has caused a margin contraction, it has made Hercules Capital more profitable. Looking at growth from a sector-level, the US capital markets industry has been growing its average earnings by double-digit 15.83% over the past twelve months, and 11.37% over the past five years. This suggests that any uplift the industry is profiting from, Hercules Capital has not been able to realize the gains unlike its industry peers.
What does this mean?
While past data is useful, it doesn’t tell the whole story. While Hercules Capital has a good historical track record with positive growth and profitability, there’s no certainty that this will extrapolate into the future. I suggest you continue to research Hercules Capital to get a more holistic view of the stock by looking at:
1. Future Outlook: What are well-informed industry analysts predicting for HTGC’s future growth? Take a look at our free research report of analyst consensus for HTGC’s outlook.
2. Financial Health: Is HTGC’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 30 September 2017. This may not be consistent with full year annual report figures.
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.
