Hercules Capital (HTGC) Q3 Earnings Beat on Higher Revenues
Hercules Capital Inc.’s HTGC third-quarter 2023 net investment income of 52 cents per share outpaced the Zacks Consensus Estimate of 50 cents. The bottom line reflects a rise of 53.6% from the year-ago quarter.
Results were primarily aided by an increase in the total investment income. Also, the balance sheet position remained strong and new commitments were robust. However, higher expenses hurt the results to some extent.
Net investment income was $76.8 million, up 53.6% year over year. Our estimate for the metric was $70.2 million.
Total Investment Income Improves, Expenses Rise
Total investment income was $116.7 million, jumping 38.6% from the year-ago quarter. The top line also beat the Zacks Consensus Estimate of $113.2 million.
Total gross operating expenses increased 17.4% year over year to $42.4 million. The rise was due to an increase in all expense components. Our estimate for the metric was $43.8 million.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $3.26 billion as of Sep 30, 2023.
In the third quarter, the company delivered $692.7 million in gross new debt and equity commitments, and $456.8 million in gross new funding. It realized early loan repayments of $148 million.
Balance Sheet Position Strong
As of Sep 30, 2023, Hercules Capital’s net asset value was $10.93 per share compared with $10.53 as of Dec 31, 2022.
As of Sep 30, 2023, the company had $598 million in liquidity, including $32 million of unrestricted cash and cash equivalents, and $566 million in credit facilities.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.8%, up from 4.4% at the end of the prior-year quarter.
Our View
Hercules Capital’s loan origination activity continues to be on track, which is likely to support top-line growth in the quarters ahead. However, as the company undertakes efforts to improve originations, expenses are expected to be elevated.
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 #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Performance & Earnings Release Date of Other Finance Companies
Ares Capital Corporation’s ARCC third-quarter 2023 core earnings of 59 cents per share surpassed the Zacks Consensus Estimate by a penny. The bottom line reflected a rise of 18% from the prior-year quarter.
ARCC‘s results were primarily aided by an improvement in the total investment income. Also, the company’s portfolio activity was robust in the quarter. However, an increase in expenses hurt ARCC’s results to some extent.
PennantPark Floating Rate Capital Ltd. PFLT is scheduled to announce quarterly numbers on Nov 15.
Over the past seven days, the Zacks Consensus Estimate for PFLT’s fourth-quarter fiscal 2023 (ended Sep 30) earnings has been unchanged at 30 cents. The consensus estimate indicates a rise of 3.5% from the prior-year quarter’s reported number.
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