Hercules Capital (NYSE:HTGC) Issues Earnings Results

Hercules Capital (NYSE:HTGC) announced its earnings results on Thursday. The financial services provider reported $0.47 EPS for the quarter, hitting the consensus estimate of $0.47, Zacks reports. Hercules Capital had a return on equity of 16.01% and a net margin of 67.68%. The firm had revenue of $135.69 million for the quarter, compared to the consensus estimate of $144.11 million. During the same period in the previous year, the business earned $0.49 EPS.

Here are the key takeaways from Hercules Capital’s conference call:

• Record growth and originations: Year-to-date originations reached a record $3.44 billion, up 20% year over year, while assets under management grew 17.7% to approximately $6.5 billion. Management expects 2026 to exceed 2025 records for commitments and fundings.
• Strong earnings and distribution coverage: Third-quarter net investment income was $87.3 million, or $0.47 per share, covering 118% of the base distribution and 100% of the base plus supplemental distribution. NAV per share increased nearly 1% quarter over quarter to $12.26.
• Credit quality remained stable: The weighted-average internal credit rating improved to 2.12, non-accruals remained limited to two loans, and all accruing debt investments were current on scheduled principal and interest payments. PIK income also declined as a percentage of revenue.
• Constructive fourth-quarter outlook: Management expects prepayments to normalize to $200 million-$300 million in Q4, supporting higher total investment income and net investment income, while ROE is expected to begin improving from what executives characterized as a likely floor.
• Higher funding costs and leverage: The weighted-average cost of debt rose to 5.4% from 5.2%, while GAAP leverage increased to 111.1% from 103.9% as borrowings funded portfolio growth. Management also guided to core yield of 11.8%-12%, reflecting continued competitive pressure on pricing.

Hercules Capital Stock Down 1.5%

Shares of Hercules Capital stock traded down $0.26 on Friday, hitting $16.64. The company had a trading volume of 883,412 shares, compared to its average volume of 1,858,808. Hercules Capital has a 1 year low of $13.70 and a 1 year high of $19.13. The company has a debt-to-equity ratio of 1.03, a quick ratio of 1.37 and a current ratio of 1.37. The stock has a 50 day moving average of $17.02 and a 200-day moving average of $16.19. The stock has a market capitalization of $3.12 billion, a price-to-earnings ratio of 8.29 and a beta of 0.82.

Hercules Capital Cuts Dividend

The business also recently disclosed a quarterly dividend, which will be paid on Tuesday, November 17th. Shareholders of record on Tuesday, November 10th will be issued a dividend of $0.07 per share. The ex-dividend date of this dividend is Tuesday, November 10th. This represents a $0.28 dividend on an annualized basis and a yield of 1.7%. This is a decrease from Hercules Capital’s previous quarterly dividend of $0.40. Hercules Capital’s dividend payout ratio is presently 79.60%.

Analyst Ratings Changes

A number of analysts have weighed in on the company. UBS Group upgraded Hercules Capital from a “neutral” rating to a “buy” rating and increased their price target for the stock from $15.50 to $18.50 in a report on Tuesday, September 1st. Weiss Ratings upgraded Hercules Capital from a “hold (c)” rating to a “hold (c+)” rating in a research report on Wednesday. Finally, LADENBURG THALM/SH SH dropped their price target on Hercules Capital from $21.00 to $20.00 and set a “buy” rating on the stock in a research note on Friday, July 31st. One research analyst has rated the stock with a Strong Buy rating, five have assigned a Buy rating and two have issued a Hold rating to the company. According to data from MarketBeat.com, the company presently has an average rating of “Moderate Buy” and a consensus target price of $18.89.

About Hercules Capital

Hercules Capital, Inc is a business development company and specialty finance firm that provides debt financing to innovative, growth-oriented companies. The company focuses primarily on venture capital-backed businesses in the technology, life sciences, and sustainable and specialty technology sectors.

Hercules Capital offers secured loans and other forms of growth capital designed to support companies through various stages of development, including expansion, acquisitions, recapitalizations, and initial public offerings.