National Securities upgraded shares of Garrison Capital (NASDAQ:GARS) from a neutral rating to a buy rating in a research note published on Friday. The brokerage currently has $10.00 target price on the investment management company’s stock.
“• Garrison posted adjusted NII/share of $0.27 for 4Q17, meeting our expectations and consensus estimates. We note that the quarter was negatively impacted by $0.03/share pertaining to legal expenses for cleaning up 4/5 problem assets. Absent this cost, the $0.28/share quarterly dividend would have been exceeded.
• In 3Q18, we expect the incentive fee to be earned again and as a result we think that GARS will be forced to reduce the quarterly dividend to $0.23/share. Although from 3Q18 – 4Q19 we model NII/share to range from $0.25/share – $0.27/share we expect the company to set the dividend at a more conservative level to ensure further cuts are not needed in the foreseeable future in the event spreads compress further, although we do not expect that to be the case for the broader market.
• Non-accruals at cost decreased to $5.0 million of 1.3% of the portfolio from $36.1 million or 9.4% of the portfolio Q/Q. The only remaining non-accrual is Rooster Energy which is marked at 82% of cost and has been marked there since 6/30/17. The company feels comfortable in the third-party marks on this and management notes that they are first lien debt investors with no debt ahead of them.
• As a result of the continued larger borrower focus via purchased and club deals as well roughly 90% of the portfolio being sponsored investments, we think that NAV/share has upside from here.
• As a result of the substantially improved operational performance and GARS cleaning up its credit issues, we are upgrading shares to BUY from NEUTRAL but maintaining our $10 price target as we expect the company to still remain discounted to NAV/share by a decent margin until it demonstrates a longer track record of stable NAV and no new credit issues. We are revising our 2018 NII/share estimate to $1.11 from $0.98 and are rolling out our 2019 adjusted NII/share estimate of $1.03. The reason for the Y/Y decline in adjusted NII/share is entirely due to our expectations for the incentive fee being earned for the full year for 2019 while only in 2H18.,” National Securities’ analyst wrote.
Several other research firms also recently commented on GARS. ValuEngine raised Garrison Capital from a buy rating to a strong-buy rating in a research note on Friday, December 1st. Zacks Investment Research raised Garrison Capital from a strong sell rating to a hold rating in a research note on Friday, December 29th. Finally, Maxim Group reaffirmed a buy rating and set a $11.00 price objective on shares of Garrison Capital in a research note on Thursday, November 9th. Five research analysts have rated the stock with a hold rating, two have assigned a buy rating and one has assigned a strong buy rating to the company’s stock. The stock presently has an average rating of Buy and an average target price of $10.13.
Garrison Capital (NASDAQ:GARS) last posted its quarterly earnings data on Tuesday, March 6th. The investment management company reported $0.27 EPS for the quarter, meeting the Thomson Reuters’ consensus estimate of $0.27. The firm had revenue of $9.69 million during the quarter, compared to the consensus estimate of $8.98 million. Garrison Capital had a return on equity of 9.12% and a net margin of 17.00%. equities research analysts predict that Garrison Capital will post 1.02 earnings per share for the current year.
The firm also recently announced a quarterly dividend, which will be paid on Thursday, March 29th. Stockholders of record on Friday, March 23rd will be paid a dividend of $0.28 per share. This represents a $1.12 dividend on an annualized basis and a dividend yield of 13.35%. The ex-dividend date of this dividend is Thursday, March 22nd. Garrison Capital’s dividend payout ratio (DPR) is 287.18%.
Hedge funds have recently modified their holdings of the company. Goldman Sachs Group Inc. purchased a new position in shares of Garrison Capital during the 2nd quarter worth approximately $129,000. OxFORD Asset Management LLP raised its stake in shares of Garrison Capital by 56.1% during the 3rd quarter. OxFORD Asset Management LLP now owns 17,586 shares of the investment management company’s stock worth $148,000 after buying an additional 6,321 shares in the last quarter. Millennium Management LLC raised its stake in shares of Garrison Capital by 99.5% during the 4th quarter. Millennium Management LLC now owns 24,735 shares of the investment management company’s stock worth $201,000 after buying an additional 12,335 shares in the last quarter. Two Sigma Advisers LP raised its stake in shares of Garrison Capital by 18.0% during the 4th quarter. Two Sigma Advisers LP now owns 81,828 shares of the investment management company’s stock worth $664,000 after buying an additional 12,500 shares in the last quarter. Finally, BlackRock Inc. raised its stake in shares of Garrison Capital by 11.4% during the 4th quarter. BlackRock Inc. now owns 108,414 shares of the investment management company’s stock worth $879,000 after buying an additional 11,119 shares in the last quarter. 25.18% of the stock is owned by institutional investors and hedge funds.
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Garrison Capital Company Profile
Garrison Capital Inc is a managed, closed-end, non-diversified management investment company. The Company’s investment objective is to generate current income and capital appreciation by making investments primarily in debt securities and loans of the United States-based middle-market companies, which it defines as those having annual earnings before interest, taxes and depreciation, or EBITDA, of certain amount.
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