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Apollo Investment (AINV) Stock Up Despite Q2 Earnings Miss

Apollo Investment Corporation’s AINV second-quarter fiscal 2022 (ended Sep 30) net investment income of 33 cents per share missed the Zacks Consensus Estimate of 36 cents. The bottom line also declined 23.3% year over year.

The results were hurt by lower total investment income and a rise in expenses. On the other hand, robust gross fundings and decent portfolio activities acted as tailwinds. This perhaps boosted investor sentiments as the company’s shares gained 1.3% since the earnings release late last week.

Net investment income was $21.2 million, down 24% from the prior-year quarter.

Total Investment Income Down, Expenses Up

Total investment income was $52.9 million, down 3.7% year over year. The fall was mainly due to lower interest income.

Total expenses, net of performance-based incentive fee offset and expense reimbursements, rose 17.3% to $31.7 million.

Solid Balance Sheet Position

As of Sep 30, 2021, the company’s cash and cash equivalents (including foreign currencies) totaled $27.5 million, down from $54.6 million on Mar 31, 2021.

As of Sep 30, 2021, Apollo Investment had $1.6 billion of debt obligations. This included $350 million of Senior Unsecured Notes, $125 million of Unsecured Notes, and $1.13 billion outstanding under the credit facility.

Apollo Investment’s total assets amounted to $2.69 billion, up from $2.54 billion as of Mar 31, 2021.

Net asset value was $16.07 per share, up from $15.88 as of March 2021-end.

Decent Portfolio Activity

The fair value of Apollo Investment’s total investment portfolio was $2.61 billion as of Sep 30, 2021.

In the quarter, gross fundings were $290.1 million while gross exits totaled $176 million. New investment commitments of $222 million were made during the quarter.

Share Repurchase Update

During the quarter, Apollo Investment repurchased 0.45 million shares for $5.9 million.

Further, subsequent to quarter-end through Nov 3, the company repurchased 0.31 million shares for $4.1 million.

Our View

Continued decent origination volumes are expected to support Apollo Investment’s financials. Elevated expenses are likely to hurt the bottom line to some extent.

Currently, Apollo Investment 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

Hercules Capital Inc.’s HTGC third-quarter 2021 net investment income of 33 cents per share beat the Zacks Consensus Estimate by a penny. The bottom line was 2.9% down from the year-ago quarter figure.

Ares Capital Corporation’s ARCC third-quarter 2021 core earnings of 47 cents per share beat the Zacks Consensus Estimate of 45 cents. The bottom line reflected a rise of 20.5% from the prior-year quarter.

TriplePoint Venture Growth BDC Corp.’s TPVG third-quarter 2021 net investment income was 32 cents per share, missing the Zacks Consensus Estimate of 35 cents. The bottom line also declined 20% from the year-ago quarter.

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Ares Capital Corporation (ARCC): Free Stock Analysis Report
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