Medley Capital (MCC) Incurs Wider-Than-Expected Loss in Q4
Medley Capital Corporation’s MCC fourth-quarter fiscal 2020 (ended Sep 30) net investment loss was 32 cents per share, which was wider than the Zacks Consensus Estimate of a loss of 18 cents. In the prior-year quarter, the company reported net investment loss of $3.01.
Results reflect a decline in total investment income and lower expenses. Further, portfolio activity remained decent during the quarter.
Net investment loss was $0.9 million compared with $8.2 million loss recorded in the prior-year quarter.
In fiscal 2020, net investment loss was $2.7 million or 68 cents per share compared with loss of $20.9 billion or $7.66 per share in fiscal 2019.
Total Investment Income & Expenses Decline
Total investment income for the reported quarter was $4.4 million, down 45.5% year over year. The fall was due to a decline in all revenue components. However, the figure beat the Zacks Consensus Estimate of $4.3 million.
In fiscal 2020, total investment income plunged 53.5% to $21.5 million.
Total expenses, net of management and incentive fee waive, declined 67.7% to $5.3 million.
Decent Balance Sheet Position
As of Sep 30, 2020, the company’s cash and cash equivalents (including restricted cash) totaled $56.5 million, down from $84.3 million on Sep 30, 2019.
Further, as of Sep 30, 2020, Medley Capital had $74.0 million outstanding in aggregate principal amount of 6.50% unsecured notes due 2021 and $77.8 million outstanding in aggregate principal amount of 6.125% unsecured notes due 2023.
Medley Capital’s total assets amounted to $306.1 million, down from $486.3 million recorded as of Sep 30, 2019.
Net asset value was $55.30 per share, down from $79.46 as of Sep 30, 2019.
Modest Portfolio Activity
The fair value of Medley Capital’s total investment portfolio was $246.7 million as of Sep 30, 2020. The company had investments in securities of 42 portfolio companies.
In the reported quarter, the company originated $0.7 million of investments, and had $7 million of repayments and sales.
Dividend Update
The board of directors of Medley Capital did not declare quarterly dividend for fourth-quarter fiscal 2020.
Our Take
Continued decent origination volumes are expected to aid Medley Capital’s growth. Also, 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-eps-surprise-chart | Medley Capital Corporation Quote
Currently, Medley Capital carries a Zacks Rank #4 (Sell).
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 third-quarter 2020 net investment income of 34 cents per share surpassed the Zacks Consensus Estimate of 32 cents. However, the bottom line declined 8.1% from the year-ago reported figure.
Ares Capital Corporation’s ARCC third-quarter 2020 core earnings of 39 cents per share beat the Zacks Consensus Estimate by a penny. However, the bottom line declined 18.8% year over year.
TriplePoint Venture Growth BDC Corp.’s TPVG third-quarter 2020 net investment income of 40 cents per share outpaced the Zacks Consensus Estimate of 36 cents. Also, the bottom line improved 38% from the year-ago quarter.
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