Hercules Capital (NYSE:HTGC) Releases Earnings Results, Hits Estimates

Hercules Capital (NYSE:HTGC) released its quarterly earnings results on Thursday. The financial services provider reported $0.50 EPS for the quarter, meeting analysts’ consensus estimates of $0.50, Zacks reports. Hercules Capital had a net margin of 59.85% and a return on equity of 16.05%. The company had revenue of $134.41 million for the quarter, compared to analyst estimates of $146.71 million. During the same quarter last year, the firm posted $0.50 earnings per share. The company’s quarterly revenue was up 8.4% compared to the same quarter last year.

Here are the key takeaways from Hercules Capital’s conference call:

• Record quarterly performance: Total investment income reached $149.1 million and net investment income was $92.9 million, or $0.50 per share. NII covered the base distribution by 125% and the full distribution, including the $0.07 supplemental, by 106%.
• Hercules reported record first-half originations of $2.74 billion, up 35.6% year over year, while assets under management grew 14.4% to approximately $6.1 billion. Management expects both the public BDC and private-credit funds to contribute to future growth.
• Credit performance remained relatively stable, with non-accrual investments representing just 0.1% of portfolio fair value, while leverage declined materially to 103.9% on a GAAP basis and available BDC liquidity stood at $652.9 million. The company also issued $325 million of five-year unsecured notes after quarter-end to support refinancing and future originations.
• Prepayments surged to $572.1 million in Q2 but are expected to normalize to $200 million-$300 million in Q3, reducing prepayment-related revenue. Management also guided core yield lower to 11.8%-12% as higher-yielding legacy assets are replaced and the impact of prior rate cuts continues.
• Management noted that banks and other lenders have become increasingly aggressive on deal structures, while a growing number of companies in the pipeline may not meet Hercules’ underwriting standards. Q3 originations are expected to be seasonally lower and back-end weighted.

Hercules Capital Stock Performance

HTGC stock traded down $0.03 on Thursday, reaching $15.95. 2,041,355 shares of the company were exchanged, compared to its average volume of 1,330,578. The firm has a market capitalization of $2.98 billion, a PE ratio of 9.01 and a beta of 0.79. Hercules Capital has a 12 month low of $13.70 and a 12 month high of $19.67. The stock’s fifty day moving average price is $15.69 and its 200 day moving average price is $15.84. The company has a debt-to-equity ratio of 1.14, a current ratio of 1.89 and a quick ratio of 1.89.

Hercules Capital Increases Dividend

The business also recently announced a quarterly dividend, which will be paid on Tuesday, August 18th. Investors of record on Tuesday, August 11th will be given a dividend of $0.40 per share. This represents a $1.60 dividend on an annualized basis and a yield of 10.0%. This is an increase from Hercules Capital’s previous quarterly dividend of $0.07. The ex-dividend date of this dividend is Tuesday, August 11th. Hercules Capital’s payout ratio is presently 90.40%.

Wall Street Analyst Weigh In

A number of research analysts recently issued reports on the stock. Weiss Ratings reiterated a “hold (c)” rating on shares of Hercules Capital in a research note on Wednesday, June 17th. UBS Group boosted their target price on shares of Hercules Capital from $15.00 to $15.50 and gave the stock a “neutral” rating in a research report on Monday, May 18th. Piper Sandler upped their price target on shares of Hercules Capital from $16.50 to $17.00 and gave the company a “neutral” rating in a report on Wednesday, May 6th. Keefe, Bruyette & Woods lowered their price target on Hercules Capital from $19.00 to $18.00 and set an “outperform” rating on the stock in a research report on Thursday, April 16th. Finally, Citizens Jmp dropped their price objective on Hercules Capital from $24.00 to $22.00 and set a “market outperform” rating on the stock in a research note on Wednesday, April 22nd. One investment analyst has rated the stock with a Strong Buy rating, four have given a Buy rating and three have assigned a Hold rating to the company’s stock. Based on data from MarketBeat.com, the stock currently has a consensus rating of “Moderate Buy” and an average target price of $18.21.

Institutional Trading of Hercules Capital

Hedge funds and other institutional investors have recently bought and sold shares of the stock. UBS AM a distinct business unit of UBS ASSET MANAGEMENT AMERICAS LLC acquired a new position in shares of Hercules Capital during the fourth quarter valued at about $27,000. Northwestern Mutual Wealth Management Co. grew its position in Hercules Capital by 113.1% during the fourth quarter. Northwestern Mutual Wealth Management Co. now owns 1,884 shares of the financial services provider’s stock worth $35,000 after buying an additional 1,000 shares in the last quarter. Summit Securities Group LLC grew its position in Hercules Capital by 233.3% during the fourth quarter. Summit Securities Group LLC now owns 2,000 shares of the financial services provider’s stock worth $38,000 after buying an additional 1,400 shares in the last quarter. WFA of San Diego LLC bought a new position in Hercules Capital during the second quarter valued at about $55,000. Finally, Garton & Associates Financial Advisors LLC acquired a new stake in Hercules Capital during the fourth quarter worth $80,000. 19.69% of the stock is currently owned by institutional investors and hedge funds.

Hercules Capital Company Profile

Hercules Capital, Inc is a specialty finance company organized as a business development company (BDC) that provides tailored debt financing solutions to high‐growth companies. Through its external management structure, Hercules Capital extends senior secured loans, subordinated debt and growth capital designed to support research and development, expansion initiatives and working capital needs. The firm primarily partners with venture capital and private equity sponsors to finance innovative enterprises across various developmental stages.

The company’s investment portfolio is concentrated in technology, life sciences and sustainable and renewable technology sectors, reflecting its focus on industries with strong growth prospects and recurring capital requirements.