Triangle Capital Corporation (NYSE:TCAP) had its price objective trimmed by National Securities from $16.00 to $11.00 in a report issued on Monday, November 6th. The brokerage currently has a neutral rating on the credit services provider’s stock.
“• Triangle‘s NAV/share decreased by 10.9% Q/Q to $13.20 from $14.83, an astonishing drop that drove an annualized economic loss of 31.6% for 3Q17. We thought we were being conservative on 10/24/17 when, in the earnings preview, we forecasted NAV would close 9/30/17 at $14.21 and 2017 at $13.56 but it appears that we were overly optimistic in these assumptions.
• We also underestimated the dividend cut although it was refreshing to have the band aid pulled off. We had anticipated a reduction in the quarterly dividend to $0.36/share in 1Q18 but TCAP cut the dividend all the way to $0.30/share for 4Q17.
• There has been nothing short of a remarkable amount of “TCAP 1.0” (2014-2015 vintages) that have gone very bad very fast and we cannot help but expect many other pairs of shoes to drop given the current trajectory of asset quality. Additionally, as we have pointed out, the marks tend to get continually much more negative when an asset is placed on non-accrual status and we thus expect realized losses to outstrip reversals of unrealized depreciation and cause net losses to drive further NAV reductions.
• TCAP has enough headwinds in terms of the drag on earnings from troubled credits pulling down the overall portfolio yield, but as the company does more first lien and unitranche loans this will doubly pressure yield and any further uptick in credit quality could even put the $0.30/share quarterly dividend in jeopardy.
• While the company discussed the potential of strategic alternatives, such as joint venture (JV), merger, sale of loans, etc. we don’t think many of these are likely as any company capable of acquiring the company would likely not want to muddy up their balance sheet. Any assets the company is looking to sell would likely be those that could only be sold at a loss, and while a JV would work nicely for the unitranche book it would be too little too late, in our opinion.
• We are revising our 2017 NII/share estimate to $1.49 from $1.65 and our 2018 NII/share estimate to $1.27 from $1.60.,” National Securities’ analyst commented.
A number of other research firms also recently weighed in on TCAP. BidaskClub downgraded Triangle Capital from a hold rating to a sell rating in a research note on Sunday, July 16th. Zacks Investment Research downgraded Triangle Capital from a hold rating to a sell rating in a research note on Thursday, July 13th. ValuEngine upgraded Triangle Capital from a hold rating to a buy rating in a research note on Tuesday, August 1st. JMP Securities downgraded Triangle Capital from an outperform rating to a market perform rating in a research note on Thursday, August 3rd. Finally, Keefe, Bruyette & Woods cut Triangle Capital from an outperform rating to a market perform rating and dropped their price target for the stock from $20.50 to $18.00 in a report on Thursday, August 3rd. Four investment analysts have rated the stock with a sell rating, five have assigned a hold rating and five have given a buy rating to the stock. The company currently has an average rating of Hold and an average price target of $16.57.
Triangle Capital (NYSE:TCAP) last posted its quarterly earnings results on Wednesday, November 1st. The credit services provider reported $0.36 earnings per share for the quarter, missing the Zacks’ consensus estimate of $0.41 by ($0.05). The company had revenue of $29.88 million during the quarter, compared to the consensus estimate of $32.84 million. Triangle Capital had a negative net margin of 36.80% and a positive return on equity of 10.67%. The firm’s revenue for the quarter was up 9.0% compared to the same quarter last year. During the same quarter in the prior year, the business earned $0.41 earnings per share. analysts anticipate that Triangle Capital will post 1.56 EPS for the current fiscal year.
The firm also recently declared a quarterly dividend, which will be paid on Wednesday, December 20th. Stockholders of record on Wednesday, December 6th will be paid a $0.30 dividend. The ex-dividend date of this dividend is Tuesday, December 5th. This represents a $1.20 annualized dividend and a dividend yield of 12.50%. Triangle Capital’s payout ratio is -200.00%.
Several institutional investors and hedge funds have recently modified their holdings of TCAP. WFG Advisors LP bought a new position in shares of Triangle Capital in the 2nd quarter valued at $101,000. Financial Counselors Inc. bought a new stake in Triangle Capital during the 3rd quarter worth $143,000. Commerce Bank bought a new stake in Triangle Capital during the 3rd quarter worth $171,000. Sigma Planning Corp bought a new stake in Triangle Capital during the 2nd quarter worth $181,000. Finally, Trust Co. of Vermont grew its position in Triangle Capital by 139.9% during the 2nd quarter. Trust Co. of Vermont now owns 13,342 shares of the credit services provider’s stock worth $235,000 after acquiring an additional 7,781 shares during the last quarter. Institutional investors own 33.84% of the company’s stock.
Triangle Capital Company Profile
Triangle Capital Corporation is an internally managed, non-diversified closed-end management investment company. The Company is a specialty finance company that provides customized financing to lower middle market companies located primarily in the United States. The Company’s investment objective is to seek attractive returns by generating current income from its debt investments and capital appreciation from its equity-related investments.
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