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Hercules Capital (HTGC) Q1 Earnings Miss, Revenues & Costs Dip
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Hercules Capital Inc.’s (HTGC - Free Report) first-quarter 2022 net investment income of 30 cents per share missed the Zacks Consensus Estimate by a penny. However, the bottom line was in line with the year-ago quarter figure.
Results were primarily hurt by a decline in total investment income, partly offset by lower expenses. However, the balance sheet position remained strong and new commitments were robust.
Net investment income was $35.8 million, up 3.5% year over year.
Total Investment Income & Expenses Decline
Total investment income was $65.2 million, down 5.2% from the year-ago quarter. The top line lagged the Zacks Consensus Estimate of $69.4 million.
Total gross operating expenses declined 12.4% year over year to $30.8 million. The decline was due to a fall in almost all cost components, except for total employee compensation costs, and general and administrative costs.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $2.59 billion as of Mar 31, 2022.
In the first quarter, the company delivered $615.2 million in gross new debt and equity commitments and $351.6 million in gross new fundings. It realized early loan repayments of $84.9 million.
Balance Sheet Position Strong
As of Mar 31, 2022, Hercules Capital’s net asset value was $10.82 per share compared with $11.22 as of Dec 31, 2021.
The company had $430.3 million in liquidity, including $59.3 million of unrestricted cash and cash equivalents, and $370.9 million in credit facilities, as of Mar 31, 2022.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4%, down from 5.5% 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
Ally Financial’s (ALLY - Free Report) first-quarter 2022 adjusted earnings of $2.03 per share surpassed the Zacks Consensus Estimate of $1.93. The bottom line reflects a decline of 2.9% from the year-ago quarter.
ALLY’s results benefited primarily from an improvement in revenues and higher loans and deposit balances. However, a rise in expenses and higher provisions were headwinds for ALLY.
Capital One’s (COF - Free Report) first-quarter 2022 earnings of $5.62 per share easily outpaced the Zacks Consensus Estimate of $5.39. The bottom line, however, declined 20% from the year-ago quarter. The reported quarter included 35 cents per share of gain on the sale of the partnership card portfolio.
COF’s results benefited from a decent improvement in loan balances, which supported net interest income. Higher consumer confidence aided the credit card business and non-interest income. However, an increase in operating expenses was a headwind. In the quarter, COF recorded a provision for credit losses.
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Hercules Capital (HTGC) Q1 Earnings Miss, Revenues & Costs Dip
Hercules Capital Inc.’s (HTGC - Free Report) first-quarter 2022 net investment income of 30 cents per share missed the Zacks Consensus Estimate by a penny. However, the bottom line was in line with the year-ago quarter figure.
Results were primarily hurt by a decline in total investment income, partly offset by lower expenses. However, the balance sheet position remained strong and new commitments were robust.
Net investment income was $35.8 million, up 3.5% year over year.
Total Investment Income & Expenses Decline
Total investment income was $65.2 million, down 5.2% from the year-ago quarter. The top line lagged the Zacks Consensus Estimate of $69.4 million.
Total gross operating expenses declined 12.4% year over year to $30.8 million. The decline was due to a fall in almost all cost components, except for total employee compensation costs, and general and administrative costs.
Portfolio Value & New Commitments Solid
The fair value of Hercules Capital’s total investment portfolio was $2.59 billion as of Mar 31, 2022.
In the first quarter, the company delivered $615.2 million in gross new debt and equity commitments and $351.6 million in gross new fundings. It realized early loan repayments of $84.9 million.
Balance Sheet Position Strong
As of Mar 31, 2022, Hercules Capital’s net asset value was $10.82 per share compared with $11.22 as of Dec 31, 2021.
The company had $430.3 million in liquidity, including $59.3 million of unrestricted cash and cash equivalents, and $370.9 million in credit facilities, as of Mar 31, 2022.
At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 4%, down from 5.5% 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 of Other Finance Companies
Ally Financial’s (ALLY - Free Report) first-quarter 2022 adjusted earnings of $2.03 per share surpassed the Zacks Consensus Estimate of $1.93. The bottom line reflects a decline of 2.9% from the year-ago quarter.
ALLY’s results benefited primarily from an improvement in revenues and higher loans and deposit balances. However, a rise in expenses and higher provisions were headwinds for ALLY.
Capital One’s (COF - Free Report) first-quarter 2022 earnings of $5.62 per share easily outpaced the Zacks Consensus Estimate of $5.39. The bottom line, however, declined 20% from the year-ago quarter. The reported quarter included 35 cents per share of gain on the sale of the partnership card portfolio.
COF’s results benefited from a decent improvement in loan balances, which supported net interest income. Higher consumer confidence aided the credit card business and non-interest income. However, an increase in operating expenses was a headwind. In the quarter, COF recorded a provision for credit losses.