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Hercules Capital (HTGC) Q1 Earnings Beat on Higher Revenues

Zacks Equity Research
·3 min read

Hercules Capital Inc.’s HTGC first-quarter 2020 net investment income of 37 cents per share outpaced the Zacks Consensus Estimate by a penny. The bottom line also grew 23.3% from the year-ago reported figure.

The results reflect higher total investment income and a strong balance sheet position. However, a rise in operating expenses acted as a headwind.

Net investment income was $40.6 million, up 39.8% from the prior-year quarter.

Total Investment Income & Expenses Rise

Total investment income was $73.6 million, up 25.2% from the year-ago quarter. The upside was mainly driven by a higher average debt investment balance and rise in income from acceleration due to early loan repayments. The top line beat the Zacks Consensus Estimate of $69.8 million.

Total quarterly operating expenses increased 11% year over year to $33 million. The increase resulted from a rise in all expense components, except stock-based compensation costs.

Solid Portfolio Value & New Commitments

The fair value of Hercules Capital’s total investment portfolio was $2.3 billion as of Mar 31, 2020.

In the reported quarter, the company provided $256.8 million in new debt and equity commitments, as well as realized early loan repayments of $150.5 million.

Strong Balance Sheet Position

As of Mar 31, 2020, Hercules Capital’s net asset value was $9.92 per share compared with $10.55 on Dec 31, 2019.

The company had $438.2 million in liquidity — including $34.3 million of unrestricted cash and cash equivalents, and $403.9 million in credit facilities — as of Mar 31, 2020.

At the end of the first quarter, the weighted average cost of debt — comprising interest and fees — was 5.2%, down from 5.9% at the end of the prior-year quarter.

Our Take

Hercules Capital’s loan origination activity continues to be on track. However, elevated expense levels might hurt the bottom line to some extent. Further, lower rates remain a matter of concern.

Hercules Capital, Inc. Price, Consensus and EPS Surprise

Hercules Capital, Inc. Price, Consensus and EPS Surprise
Hercules Capital, Inc. Price, Consensus and EPS Surprise

Hercules Capital, Inc. price-consensus-eps-surprise-chart | Hercules Capital, Inc. Quote

Currently, Hercules Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Earnings Release Date of Other Finance Stocks

FS KKR Capital Corp. FSK, KKR & Co. Inc. KKR and TriplePoint Venture Growth BDC Corp. TPVG are scheduled to announce quarterly numbers on May 6.

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