A month has gone by since the last earnings report for Owl Rock Capital Corporation (ORCC). Shares have added about 1% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Owl Rock Capital Corporation due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Owl Rock Capital's Q1 Earnings Miss Estimates
Owl Rock Capital reported first-quarter 2022 earnings per share of 31 cents, which lagged the Zacks Consensus Estimate by 6.1%. The bottom line, however, improved 19.2% year over year.
Total investment income of ORCC amounted to $264.2 million, which climbed 19.2% year over year in the first quarter. However, the figure fell short of the consensus mark by 3.2%.
New investment commitments were $530.4 million across 17 new portfolio companies. The metric plunged 38.6% year over year in the quarter under review.
Owl Rock Capital ended the first quarter with investments in 157 portfolio companies backed with an aggregate fair value of $12.8 billion. Based on the fair value, the average investment size in each portfolio company was $81.3 million as of Mar 31, 2022.
Total expenses escalated nearly 20% year over year to $141 million in the first quarter.
Net income of $44 million declined to nearly four-fold year over year due to reporting of net realized losses in the quarter under review, while the prior-year quarter witnessed net realized gains of $55.2 million.
Financial Update (as of Mar 31, 2022)
Owl Rock Capital exited the first quarter with cash and restricted cash of $332.8 million, which slumped 25.6% sequentially (from the figure as of Dec 31, 2021). Total assets of $13.2 billion slipped 0.7% sequentially.
Debt dipped 0.6% sequentially to $7 billion. ORCC had $1.4 billion of undrawn capacity under its credit facilities. It currently has no debt maturities until April 2024.
Net cash used in operating activities during the first quarter-end was $13.5 million, which is way lower than the prior-year quarter’s cash usage of $225 million.
At the quarter-end, net debt to equity deteriorated 4 basis points sequentially to 1.17x.
The board of directors at Owl Rock Capital approved a second-quarter dividend of 31 cents per share. The dividend will be paid out on or before Aug 15, 2022, to shareholders of record as of Jun 30, 2022.
Q2 2022 Outlook
Repayment activity is anticipated to remain subdued in the second quarter.
Second Half of 2022 Guidance
As most of Owl Rock Capital’s assets are floating in nature, an improving interest rate environment is projected to drive net investment income in the second half of 2022. Deal activity witnessing a turnaround in the second half of this year is likely to provide a boost to ORCC's repayment income during the same time frame.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -6.82% due to these changes.
Currently, Owl Rock Capital Corporation has a subpar Growth Score of D, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Owl Rock Capital Corporation has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Owl Rock Capital Corporation belongs to the Zacks Financial - Miscellaneous Services industry. Another stock from the same industry, Euronet Worldwide (EEFT), has gained 0.5% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.
Euronet Worldwide reported revenues of $718.5 million in the last reported quarter, representing a year-over-year change of +10.1%. EPS of $0.69 for the same period compares with $0.23 a year ago.
Euronet Worldwide is expected to post earnings of $1.64 per share for the current quarter, representing a year-over-year change of +209.4%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.
Euronet Worldwide has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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