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FS KKR Capital (FSK) Q1 Earnings Beat Estimates, Stock Up

Shares of FS KKR Capital Corp. FSK gained 1.8% in aftermarket trading in response to better-than-expected first-quarter 2021 results. Net investment income (NII) of 63 cents per share beat the Zacks Consensus Estimate of 61 cents. However, the bottom line compared unfavorably with 76 cents in the year-ago quarter.

Lower expenses and decent portfolio activity during the quarter were tailwinds. However, results were hurt by fall in total investment income.
NII was $78 million, down 20% from the prior-year quarter.

Total Investment Income & Expenses Decline

Total investment income was $151 million, down 16% year over year. The fall was mainly due to lower interest income and fee income. However, the top line marginally surpassed the Zacks Consensus Estimate of $150 million.

Total operating expenses fell 10% to $73 million. Lower management fees and interest expenses were the main reasons for the decline.

Total Portfolio Value & Balance Sheet

The fair value of FS KKR Capital’s total investment portfolio was $6.46 billion as of Mar 31, 2021.

As of Mar 31, 2021, FS KKR Capital’s net asset value was $26.03 per share compared with $25.02 on Dec 31, 2020.

The company had $7 billion in total assets and $3.2 billion in total stockholders’ equity at the end of the quarter.

Our Take

Decent origination volumes are expected to support FS KKR Capital’s profitability. However, a tough operating backdrop poses a concern.

FS KKR Capital Corp. Price, Consensus and EPS Surprise

FS KKR Capital Corp. price-consensus-eps-surprise-chart | FS KKR Capital Corp. Quote

Currently, FS KKR Capital carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


Performance of Other Finance Stocks

Goldman Sachs BDC’s GSBD first-quarter 2021 adjusted net investment income of 48 cents per share came in line with the Zacks Consensus Estimate. Also, the bottom line grew 6.7% from the year-ago figure.

Ares Capital Corporation’s ARCC first-quarter 2021 core earnings of 43 cents per share surpassed the Zacks Consensus Estimate of 42 cents. Moreover, the bottom line reflects a rise of 4.9% from the prior-year quarter’s reported number.

Hercules Capital Inc.’s HTGC first-quarter 2021 net investment income of 30 cents per share beat the Zacks Consensus Estimate by a penny. However, the bottom line declined 18.9% year over year.

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