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FS KKR Capital (FSK) Q2 Earnings Top Estimates, Costs Rise Y/Y

FS KKR Capital Corp.’s FSK second-quarter 2021 adjusted net investment income (NII) per share of 74 cents surpassed the Zacks Consensus Estimate of 61 cents. In the prior-year quarter, the company reported earnings of 62 cents. The reported quarter’s results exclude accretion resulting from the merger with FS KKR Capital Corp. II.

Results were aided by a rise in total investment income. Also, portfolio activity was decent in the quarter. However, higher expenses hurt results to some extent.

NII (GAAP basis) was $116 million, up 50.6% from the prior-year quarter.

Total Investment Income Improves, Expenses Rise

Total investment income was $206 million, up 37.3% year over year. The top line surpassed the Zacks Consensus Estimate of $146.8 million.

Total operating expenses increased 23.3% from the prior-year quarter to $90 million. All cost components except for administrative services expenses, and accounting and administrative fees witnessed a rise.

Total Portfolio Value & Balance Sheet Decent

The fair value of FS KKR Capital’s total investment portfolio was $14.7 billion as of Jun 30, 2021.

As of Jun 30, 2021, the company’s net asset value was $26.84 per share compared with $25.02 as of Dec 31, 2020.

The company had $15.7 billion in total assets and $7.7 billion in total stockholders’ equity at the end of the second 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 #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Companies

Credit Acceptance Corporation’s CACC second-quarter 2021 earnings of $17.18 per share comfortably outpaced the Zacks Consensus Estimate of $10.08. The bottom line reflects a substantial improvement from $5.40 earned in the prior-year quarter. These figures include certain non-recurring items.

Ares Capital Corporation’s ARCC second-quarter 2021 core earnings of 53 cents per share surpassed the Zacks Consensus Estimate of 43 cents. Moreover, the bottom line reflects a rise of 35.9% from the prior-year quarter’s reported number.

Hercules Capital Inc.’s HTGC second-quarter 2021 net investment income of 32 cents per share was in line with the Zacks Consensus Estimate. The figure indicates no change from the year-ago quarter’s reported number.

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