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Can Higher Rates Support Main Street's (MAIN) Q2 Earnings?

Zacks Equity Research

Main Street Capital Corporation MAIN is slated to announce second-quarter 2019 results on Aug 8, after market close. While its revenues are expected to grow year over year, earnings are likely to decline.

Notably, the company has an impressive earnings surprise history. It surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 5.2%.

In the last reported quarter, the company witnessed an upsurge in total investment income, partially offset by rise in expenses.

Main Street Capital Corporation Price and EPS Surprise

Main Street Capital Corporation Price and EPS Surprise

Main Street Capital Corporation price-eps-surprise | Main Street Capital Corporation Quote

However, activities of the company during the second quarter were inadequate to win analysts’ confidence. As a result, the consensus estimate for earnings of 62 cents has remained unchanged over the past 30 days. Notably, the figure reflects a year-over-year decline of 6.1%.

Before we take a look at what our quantitative model predicts, let’s check the factors that are expected to impact second-quarter results.

Factors at Play

Given the higher interest rates, Main Street is likely to have witnessed growth in net investment income during the quarter. Notably, the consensus estimate for second-quarter revenues indicates a rise of 2.4% from the year-ago reported figure.

Also, the company expects to have generated distributable net investment income of 63 cents to 65 cents share during the quarter.

However,Main Street has been witnessing persistent rise in general and compensation-related expenses over the past several quarters. The same trend is likely to have persisted in the to-be-reported quarter.

Earnings Whispers

Now, let’s check what our quantitative model predicts.

According to our quantitative model, it cannot be conclusively predicted if Main Street will be able to beat estimates this time. This is because it does not have the right combination of the two key ingredients — a positive Earnings ESPand Zacks Rank #3 (Hold) or better — to be confident of an earnings surprise call.

You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP:The Earnings ESP for Main Street is 0.00%.

Zacks Rank: Main Street has a Zacks Rank #3.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Companies

Ares Capital Corporation ARCC reported second-quarter 2019 core earnings of 49 cents per share that surpassed the Zacks Consensus Estimate of 44 cents. Also, the bottom line increased 25.6% from the year-ago quarter.

Hercules Capital Inc.’s HTGC second-quarter 2019 net investment income of 36 cents per share outpaced the Zacks Consensus Estimate of 33 cents. The bottom line also was 38.5% above the year-ago figure.

Capitala Finance Corp.’s CPTA second-quarter 2019 net investment income per share of 25 cents was in line with the Zacks Consensus Estimate. The figure was 3.8% lower than the prior-year quarter’s number.

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Hercules Capital, Inc. (HTGC) : Free Stock Analysis Report
 
Capitala Finance Corp. (CPTA) : Free Stock Analysis Report
 
Main Street Capital Corporation (MAIN) : Free Stock Analysis Report
 
Ares Capital Corporation (ARCC) : Free Stock Analysis Report
 
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