Sound Point Meridian Capital (NYSE:SPMC) Issues Earnings Results, Misses Estimates By $0.01 EPS

Sound Point Meridian Capital (NYSE:SPMC) posted its earnings results on Thursday. The company reported $0.28 earnings per share (EPS) for the quarter, missing analysts’ consensus estimates of $0.29 by ($0.01), Zacks reports.

Here are the key takeaways from Sound Point Meridian Capital’s conference call:

• Quarterly income did not cover the distribution: NII was $0.28 per share versus $0.60 per share in distributions. The company said spread tightening and higher model loss reserves for AI-impacted software loans weighed on income.
• NAV fell to $9.09 per share from $9.88, and the company’s estimated October NAV was lower still, at $8.41–$8.51. Management attributed the decline to realized losses, distributions exceeding NII, and weak market pricing for CLO equity.
• The company said its senior securities coverage ratio was 217% at quarter-end and declined in October, putting it closer to the 200% threshold it is focused on maintaining. Management cited portfolio trading and repayment of its senior facility as tools to manage the ratio, while noting that share repurchases could increase leverage.
• Management reported that monthly NII had risen from about $0.08 per share to more than $0.09 in the quarter and approximately $0.11 in October. It pointed to portfolio rotation, liability refinancing, expense control, and a temporary fee waiver as ways to narrow the gap with the distribution, though coverage remains short.
• Management sees potential for loan spreads and CLO equity income to improve if loan-market supply and demand move toward balance, and said it has begun to view some new-issue CLO opportunities more favorably. It also acknowledged continued uncertainty around credit quality, investor demand, and CLO equity valuations.

Sound Point Meridian Capital Trading Up 6.2%

SPMC traded up $0.36 on Thursday, reaching $6.26. The stock had a trading volume of 72,396 shares, compared to its average volume of 40,114. Sound Point Meridian Capital has a 12-month low of $5.43 and a 12-month high of $16.67. The business’s 50-day moving average price is $7.58 and its two-hundred day moving average price is $9.70. The company has a market cap of $128.43 million, a P/E ratio of 3.78 and a beta of 1.39.

Analyst Ratings Changes

SPMC has been the subject of several recent research reports. B. Riley Financial reduced their price target on Sound Point Meridian Capital from $10.50 to $10.00 and set a “neutral” rating for the company in a research report on Wednesday, August 12th. Zacks Research upgraded Sound Point Meridian Capital from a “hold” rating to a “strong-buy” rating in a research report on Tuesday, October 27th. One research analyst has rated the stock with a Strong Buy rating, one has assigned a Buy rating and two have assigned a Hold rating to the company. According to data from MarketBeat.com, Sound Point Meridian Capital has an average rating of “Moderate Buy” and a consensus price target of $15.12.

Sound Point Meridian Capital Company Profile

Sound Point Meridian Capital, Inc. is a publicly traded investment company focused on collateralized loan obligations (CLOs). It invests primarily in CLO equity and debt securities, which provide exposure to portfolios of corporate loans. Through these investments, the company participates in the financing of businesses whose loans are held in CLO portfolios. Its investment approach centers on selecting CLO securities rather than directly originating loans to companies. Sound Point Meridian Capital is externally managed by an affiliate of Sound Point Capital Management, a credit-focused investment manager.