Why Is Owl Rock Capital Corporation (ORCC) Down 2.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Owl Rock Capital Corporation (ORCC). Shares have lost about 2.6% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Owl Rock Capital Corporation due for a breakout? 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 drivers.
Owl Rock Capital's Q3 Earnings Beat Mark, In Line Y/Y
Owl Rock Capital’s third-quarter 2021 earnings per share of 33 cents beat the Zacks Consensus Estimate by 3.1% on the back of higher investment income. The results were same as the year-ago quarter’s reported figure.
The company witnessed a better investment income and new investment commitments in the third quarter. However, the same was partly offset by escalating expenses.
Quarter in Detail
In the quarter, the company’s total investment income was $269.1, up 43.9% year over year. This upside was on the back of higher interest income, dividend income, other income, total investment income from non-controlled, non-affiliated investments.
New investment commitments were $2.79 billion across 21 new portfolio companies and 13 current portfolio companies, up 231.1% year over year.
The company concluded the third quarter with investments in 130 portfolio companies with an aggregate fair value of $12.1 billion. As of Sep 30, 2021, the average investment size in each portfolio company was $93.2 million, based on fair value.
Total operating expenses of $137 million rose 35.2% year over year due to interest expense, management fee, performance-based incentive fees, professional fees, other general and administrative expenses.
The company’s interest expenses of $56.5 million increased 51.1% year over year due to higher average daily borrowings. However, the same was partly offset by a reduced average interest rate.
Dividend Update
The company declared a fourth-quarter dividend of 31 cents per share for its shareholders of record on Dec 31, 2021. The amount will be paid out on or before Jan 31, 2022
Financial Update (as of Sep 30, 2021)
The company had cash and restricted cash worth $794.7 million at the end of the third quarter.
The company exited the third quarter with $7 billion of debt, up 31% from the level on Dec 31, 2020. Owl Rock Capital had $1.6 billion of undrawn capacity under its credit facilities.
It had total assets worth $13 billion, up 15.7% from the level at 2020 end.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, Owl Rock Capital Corporation has a poor Growth Score of F, however its Momentum Score is doing a lot better with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% 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.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. 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.
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