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.
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-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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