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Hercules Capital (HTGC) Q2 Earnings Miss, Revenues Rise Y/Y

·3-min read

Hercules Capital Inc.’s HTGC second-quarter 2022 net investment income of 32 cents per share missed the Zacks Consensus Estimate by a penny. The bottom line was in line with the year-ago quarter figure.

Results were primarily hurt by a rise in expenses. However, an improvement in total investment income was a positive. Also, the balance sheet position remained strong and new commitments were robust.

Net investment income was $40.1 million, up 8.6% year over year.

Total Investment Income Improves, Expenses Rise

Total investment income was $72.1 million, up 3.7% from the year-ago quarter. The top line marginally beat the Zacks Consensus Estimate of $72 million.

Total gross operating expenses increased 3.7% year over year to $35.1 million. The rise was due to an increase in total employee compensation costs, tax expenses, and general and administrative costs

Portfolio Value & New Commitments Solid

The fair value of Hercules Capital’s total investment portfolio was $2.72 billion as of Jun 30, 2022.

In the second quarter, the company delivered $1.04 billion in gross new debt and equity commitments, and $439.1 million in gross new fundings. It realized early loan repayments of $33 million.

Balance Sheet Position Strong

As of Jun 30, 2022, Hercules Capital’s net asset value was $10.43 per share compared with $11.22 as of Dec 31, 2021.

The company had $779.7 million in liquidity, including $115.3 million of unrestricted cash and cash equivalents, and $664.4 million in credit facilities, as of Jun 30, 2022.

At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4%, down from 5.4% 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 and EPS Surprise
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 of Other Finance Companies

Ally Financial’s ALLY second-quarter 2022 adjusted earnings of $1.76 per share lagged the Zacks Consensus Estimate of $1.90. The bottom line reflected a decline of 24.5% from the year-ago quarter.

ALLY’s results were primarily hurt by a rise in expenses, a decline in other revenues and higher provisions. However, an improvement in net financing revenues was an offsetting factor. ALLY also witnessed a rise in loan balances in the quarter.

Capital One’s COF second-quarter 2022 earnings of $4.96 per share lagged the Zacks Consensus Estimate of $5.13. The bottom line also plunged 35% from the year-ago quarter.

COF’s results were adversely impacted by higher provisions for credit losses on the worsening macroeconomic environment and recessionary fears. Also, higher operating expenses acted as a headwind.


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