Owl Rock Capital (ORCC) to Post Q1 Earnings: What to Expect
Owl Rock Capital Corporation ORCC is set to report its first-quarter 2023 results on May 10, after the closing bell.
In the last reported quarter, the business development company reported adjusted earnings per share of 41 cents, beating the Zacks Consensus Estimate by 2.5% due to growth in the portfolio, increased interest rates and record net investment income. However, the positives were partially offset by higher costs.
Let’s see how things have shaped up prior to the first-quarter earnings announcement.
The Trend in Estimate Revision
The Zacks Consensus Estimate for first-quarter earnings per share of 44 cents has witnessed no movement in the past week. The estimate indicates a 41.9% increase from the year-ago quarter’s reported earnings of 31 cents per share. The Zacks Consensus Estimate for total investment income is pegged at $365.1 million, suggesting a rise of 38.2% from the year-ago quarter’s reported figure.
Owl Rock Capital’s earnings beat estimates in three of the trailing four quarters and missed on the other occasion, the average surprise being 2.1%. This is depicted in the graph below.
Owl Rock Capital Corporation Price and EPS Surprise
Owl Rock Capital Corporation price-eps-surprise | Owl Rock Capital Corporation Quote
Factors to Note
For the first quarter, the net investment income of the company is likely to have benefited on the back of solid credit performance, a high interest rate environment and improved dividend income.
ORCC’s dividend income is expected to have witnessed an uptick due to recurring dividends earned from its investments in its portfolio company Wingspire. Also, nonrecurring dividends stemming from efficient portfolio companies are likely to have aided the metric. Our estimate suggests 5.5% year-over-year growth in dividend income in the first quarter.
The investment portfolio of Owl Rock Capital is likely to have expanded in the to-be-reported quarter due to solid demand for lucrative financing solutions amid economic volatilities. Our estimate for interest income indicates a 17.9% increase from the prior-year quarter.
The factors stated above are expected to have positioned the company for year-over-year growth. However, repayments are expected to have remained soft in the quarter under review with interest rates remaining high. Also, the company is likely to have witnessed elevated operating expenses.
The increase in costs is likely to have been due to higher interest expenses, management and performance-based incentive fees. This, in turn, is anticipated to have put a strain on its margins in the to-be-reported quarter, making an earnings beat uncertain. Our estimate for operating expenses suggests a 13.7% increase from the year-ago quarter's reported figure.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Owl Rock Capital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -1.71%. The Most Accurate Estimate is currently pegged at 43 cents per share, lower than the Zacks Consensus Estimate of 44 cents.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Owl Rock Capital currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks to Consider
While an earnings beat looks uncertain for Owl Rock Capital, here are some companies in the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Robinhood Markets, Inc. HOOD has an Earnings ESP of +0.82% and a Zacks Rank of 3.
The Zacks Consensus Estimate for HOOD’s bottom line for the to-be-reported quarter remained stable over the past week. Robinhood Markets beat earnings estimates in three of the past four quarters and missed once, with an average surprise of 41.6%.
Tricon Residential Inc. TCN has an Earnings ESP of +2.85% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Tricon Residential’s bottom line for the to-be-reported quarter is pegged at 12 cents per share, which has remained stable over the past week. TCN beat earnings estimates in two of the past four quarters and missed twice, with an average surprise of 1.1%.
Terreno Realty Corporation TRNO has an Earnings ESP of +0.47% and a Zacks Rank of 3.
The Zacks Consensus Estimate for Terreno Realty’s bottom line for the to-be-reported quarter is pegged at 53 cents per share, suggesting a 15.2% year-over-year increase. TRNO beat earnings estimates in three of the past four quarters and met once, with an average surprise of 2.5%.
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Terreno Realty Corporation (TRNO) : Free Stock Analysis Report
Owl Rock Capital Corporation (ORCC) : Free Stock Analysis Report
Robinhood Markets, Inc. (HOOD) : Free Stock Analysis Report
Tricon Residential Inc. (TCN) : Free Stock Analysis Report
