National Securities reaffirmed their buy rating on shares of Solar Capital (NASDAQ:SLRC) in a research note published on Tuesday. They currently have a $25.00 price target on the financial services provider’s stock.
“ Solar posted $0.44/share of NII for 3Q18, above the $0.41/share quarterly dividend but short of our $0.46/share estimate.
The portfolio at fair value was up modestly on the quarter to $1.41 billion from $1.40 billion Q/Q. The company has been and we expect will likely continue to be one of the most disciplined underwriters in the BDC sector.
As previously discussed, Solar brought its SSLP and SSLP II joint venture programs on balance sheet, adding $226.5 million of senior secured loans to its balance sheet. The company also brought both revolvers pertaining to the SSLPs on its books.
We think this makes sense as it reduces frictional costs and greatly frees up the 30% basket for Solar. This will enable the company to make more strategic lender finance acquisitions going forward.
The company already has four distinct verticals: cash flow middle market lending ABL (asset-based lending), equipment finance, and life sciences lending. We think the company could potentially add another two verticals, although the timing of this is unknown. Solar had spoken with Crystal Financial two years before acquiring the company and had discussions with NEF four years prior to acquiring them.
The company also discussed the expansion of the platform, with Solar Capital Partners now having over $5.5 billion of AUM. We think the increased size and scale of the platform combined with uncorrelated verticals bodes well for SLRC’s earnings going forward.
We are revising our 2018 NII/share estimate to $1.79 from $1.82 and our 2019 NII/share estimate to $1.93 from $1.95 and maintaining our BUY rating and $25 price target.,” the firm’s analyst wrote.
Several other research firms also recently weighed in on SLRC. BidaskClub downgraded shares of Solar Capital from a hold rating to a sell rating in a research note on Wednesday, July 11th. Zacks Investment Research downgraded shares of Solar Capital from a hold rating to a sell rating in a research note on Wednesday, October 10th. ValuEngine downgraded shares of Solar Capital from a hold rating to a sell rating in a research note on Monday, October 8th. Finally, Wells Fargo & Co downgraded shares of Solar Capital from an outperform rating to a market perform rating in a research note on Thursday, October 4th. Two equities research analysts have rated the stock with a sell rating, two have issued a hold rating and three have issued a buy rating to the company. The stock has an average rating of Hold and an average target price of $23.67.
Solar Capital (NASDAQ:SLRC) last posted its quarterly earnings data on Monday, November 5th. The financial services provider reported $0.42 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.45 by ($0.03). The company had revenue of $37.01 million for the quarter, compared to the consensus estimate of $39.59 million. Solar Capital had a return on equity of 8.12% and a net margin of 48.83%. As a group, analysts forecast that Solar Capital will post 1.79 EPS for the current fiscal year.
The company also recently disclosed a quarterly dividend, which will be paid on Friday, January 4th. Stockholders of record on Thursday, December 20th will be paid a dividend of $0.41 per share. This represents a $1.64 annualized dividend and a dividend yield of 7.81%. The ex-dividend date is Wednesday, December 19th. Solar Capital’s dividend payout ratio (DPR) is 101.23%.
Large investors have recently modified their holdings of the company. FDx Advisors Inc. bought a new position in shares of Solar Capital during the second quarter valued at about $207,000. Texas Yale Capital Corp. bought a new position in shares of Solar Capital during the second quarter valued at about $276,000. California Public Employees Retirement System bought a new position in shares of Solar Capital during the second quarter valued at about $356,000. Royal Bank of Canada raised its stake in shares of Solar Capital by 78.4% during the first quarter. Royal Bank of Canada now owns 91,323 shares of the financial services provider’s stock valued at $1,855,000 after acquiring an additional 40,143 shares during the last quarter. Finally, Chicago Partners Investment Group LLC raised its stake in shares of Solar Capital by 14.2% during the third quarter. Chicago Partners Investment Group LLC now owns 95,165 shares of the financial services provider’s stock valued at $1,931,000 after acquiring an additional 11,867 shares during the last quarter. 59.63% of the stock is owned by hedge funds and other institutional investors.
About Solar Capital
Solar Capital Ltd. is a business development company specializing in secured debt (first lien unitranche and second lien), subordinated (unsecured) debt, minority equity, and strategic income-oriented control equity investments in leveraged middle market companies. The fund invests in aerospace and defense; air freight & logistics; asset management; automotive; banking; beverage, food and tobacco; building products; buildings and real estate; broadcasting and entertainment; cargo transport; commercial services and supplies; communications equipment; chemicals, plastics and rubber; containers, packaging and glass; construction & engineering; diversified/conglomerate manufacturing; consumer Finance; distributors; diversified/conglomerate services; diversified financial services; diversified real estate sctivities; food products; Footwear; Education Services; diversified telecommunications services; electronics; farming and agriculture; finance; grocery; health care equipment and supplies; health care facilities; education and childcare; home and office furnishing, durable consumer products; hotels, motels, inns and gaming; insurance; restaurants, leisure, amusement, and entertainment; leisure equipment tolls and services, media, multiline retail, multi sector holdings; paper and forest products; personal products; professional services, research and consulting services, software; specialty retail; textiles apparel and luxury goods, thrifts and mortgage finance, trading companies and distributors, utilities, and wireless telecommunication services; industrial conglomerates; internet software and services, IT services, machinery; mining, steel, iron, and non precious metals; oil and gas; personal, food and miscellaneous services; printing and publishing; retail stores; telecommunications; textiles and leather; and utilities.
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