FS KKR Capital Corp.’s FSK third-quarter 2019 adjusted net investment income (NII) of 22 cents per share surpassed the Zacks Consensus Estimate of 19 cents. However, the bottom line was 8.3% below the year-ago quarter figure.
Results reflect substantial increase in revenues and a strong balance sheet position. However, increase in expenses was an undermining factor.
NII (GAAP Basis) came in at $115 million, up from $56 million in the prior-year quarter.
Total Investment Income & Expenses Surge
Total investment income was $199 million, up significantly from $95 million in the year-ago quarter. The rise was mainly driven by higher interest income. Also, the figure beat the Zacks Consensus Estimate of $193.4 million.
Total operating expenses jumped substantially year over year to $84 million. Drastic surge in interest expense and management fees was the primary reason for the increase.
The fair value of FS KKR Capital’s total investment portfolio was $7.2 billion as of Sep 30, 2019.
As of Sep 30, 2019, FS KKR Capital’s net asset value was $7.86 per share compared with $8.64 as of Sep 30, 2018.
Strong Balance Sheet Position
The company had $7.8 billion in total assets and $4 billion in total stockholders’ equity as of Sep 30, 2019.
At the end of the third quarter, the debt/equity ratio was 0.78. Cash and foreign currency totaled $126 million as of Sep 30, 2019.
Share Repurchase Update
FSK KKR Capital has repurchased $136 million worth of shares through Nov 6, 2019 under the previously announced $200 million share buyback plan.
Steady improvement in total investment income and strong origination volume are expected to support FS KKR Capital’s profitability. However, considerable increase in operating expenses is a major concern.
FS Investment Corporation Price, Consensus and EPS Surprise
FS Investment Corporation price-consensus-eps-surprise-chart | FS Investment Corporation Quote
Currently, FS KKR Capital carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Prospect Capital Corporation’s PSEC first-quarter fiscal 2020 (ended Sep 30) net investment income of 19 cents per share came in line with the Zacks Consensus Estimate. The bottom-line figure decreased 17.4%, year over year.
Hercules Capital Inc.’s HTGC third-quarter 2019 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate of 34 cents. The bottom line grew 19.4% from the year-ago figure.
Newtek Business Services Corp.’s NEWT third-quarter 2019 adjusted net investment income of 63 cents per share outpaced the Zacks Consensus Estimate of 57 cents. The bottom-line figure also jumped 26% year on year.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Prospect Capital Corporation (PSEC) : Free Stock Analysis Report
Hercules Capital, Inc. (HTGC) : Free Stock Analysis Report
Newtek Business Services Corp. (NEWT) : Free Stock Analysis Report
FS Investment Corporation (FSK) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research