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Hercules Capital (HTGC) Stock Up 1.7% on Q1 Earnings Beat

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Hercules Capital Inc.’s HTGC shares gained 1.7% in the afterhours trading session in response to better-than-expected first-quarter 2021 results. Net investment income of 30 cents per share beat the Zacks Consensus Estimate by a penny. However, the bottom line declined 18.9% year over year.

Results reflected robust new commitments during the quarter. Moreover, the balance sheet position remained strong. Nonetheless, rise in operating expenses and lower revenues were headwinds.

Net investment income was $34.5 million, down 14.8% from the prior-year quarter.

Total Investment Income Down, Expenses Rise

Total investment income was $68.8 million, down 6.6% from the year-ago quarter. The fall was mainly due to lower average debt investment balance and fee income. The top line, however, surpassed the Zacks Consensus Estimate of $67.3 million.

Total gross operating expenses rose 6.3% year over year to $35.1 million. The rise resulted from higher total employee compensation.

Portfolio Value & New Commitments Solid

The fair value of Hercules Capital’s total investment portfolio was $2.40 billion as of Mar 31, 2021.

In the reported quarter, the company delivered $530.9 million in new debt and equity commitments as well as realized early loan repayments of $191.5 million.

Balance Sheet Position Strong

As of Mar 31, 2021, Hercules Capital’s net asset value was $11.36 per share compared with $11.26 on Dec 31, 2020.

The company had $550 million in liquidity — including $75 million of unrestricted cash and cash equivalents, and $475 million in credit facilities — as of Mar 31, 2021.

At the end of the first quarter, the weighted average cost of debt, comprising interest and fees, was 5.5%, up from 5.2% in the prior-year quarter end.

Our Take

Hercules Capital’s loan origination activity continues to be on track, which is likely to support top-line growth in the quarters ahead. Nevertheless, as the company continues to undertake efforts to improve originations, expenses are expected to keep flaring up, thereby, hurting profits to an extent.

Hercules Capital, Inc. Price, Consensus and EPS Surprise

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.

Performance & Earnings Release Dates of Other Finance Stocks

Ares Capital Corporation’s ARCC first-quarter 2021 core earnings of 43 cents per share surpassed the Zacks Consensus Estimate of 42 cents. Moreover, the bottom line reflects a rise of 4.9% from the prior-year quarter’s reported number.

KKR & Co. Inc. KKR and FS KKR Capital Corp. FSK are scheduled to announce results on May 4 and May 10, respectively.

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Ares Capital Corporation (ARCC) : Free Stock Analysis Report

Hercules Capital, Inc. (HTGC) : Free Stock Analysis Report

KKR & Co. Inc. (KKR) : Free Stock Analysis Report

FS KKR Capital Corp. (FSK) : Free Stock Analysis Report

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