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Hercules Capital (HTGC) Q3 Earnings Beat Estimates, Costs Up

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.

The company recorded a marginal fall in total investment income and higher expenses during the quarter. The balance sheet position remained strong and new commitments were robust.

Net investment income was $38.1 million, down 1.6% year over year.

Total Investment Income Down, Expenses Rise

Total investment income was $70.2 million, down marginally from the year-ago quarter. The top line also lagged the Zacks Consensus Estimate of $71.6 million.

Total gross operating expenses rose 5.7% to $33.4 million. The rise was due to an increase in total employee compensation costs, and general and administrative expenses.

Portfolio Value & New Commitments Solid

The fair value of Hercules Capital’s total investment portfolio was $2.51 billion as of Sep 30, 2021.

In the quarter, the company delivered $719.6 million in new debt and equity commitments as well as realized early loan repayments of $318.9 million.

Balance Sheet Position Strong

As of Sep 30, 2021, Hercules Capital’s net asset value was $11.54 per share compared with $11.26 as of Dec 31, 2020.

The company had $818.4 million in liquidity — including $235.9 million of unrestricted cash and cash equivalents, and $582.5 million in credit facilities — as of Sep 30, 2021.

At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4.9%, down from 5.1% at the end of the prior-year quarter.

Our Take

Hercules Capital’s loan origination activity continues to be on track, which is likely to support top-line growth in the quarters ahead. However, as the company continues to undertake efforts to improve originations, expenses are expected to remain elevated.

Hercules Capital, Inc. Price, Consensus and EPS Surprise

Hercules Capital, Inc. price-consensus-eps-surprise-chart | Hercules Capital, Inc. Quote

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

Performance & Earnings Dates Other Finance Stocks

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. TPVG and Apollo Investment Corporation AINV are slated to announce quarterly numbers on Nov 3 and Nov 4, respectively.

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