Hercules Capital (NYSE:HTGC) Posts Earnings Results, Meets Expectations

Hercules Capital (NYSE:HTGC) posted its quarterly earnings data on Thursday. The financial services provider reported $0.47 EPS for the quarter, meeting the consensus estimate of $0.47, Zacks reports. The business had revenue of $135.69 million for the quarter, compared to analysts’ expectations of $144.11 million. Hercules Capital had a net margin of 62.84% and a return on equity of 15.87%. During the same period in the previous year, the firm posted $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 2.0%

Shares of NYSE:HTGC traded down $0.34 during midday trading on Friday, reaching $16.56. The company had a trading volume of 2,204,240 shares, compared to its average volume of 1,035,746. The company has a quick ratio of 1.37, a current ratio of 1.37 and a debt-to-equity ratio of 1.03. The business’s 50 day moving average price is $17.01 and its 200 day moving average price is $16.18. The stock has a market cap of $3.10 billion, a PE ratio of 8.90 and a beta of 0.82. Hercules Capital has a 1-year low of $13.70 and a 1-year high of $19.13.

Hercules Capital Cuts Dividend

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

Analysts Set New Price Targets

A number of brokerages have recently commented on HTGC. Weiss Ratings upgraded Hercules Capital from a “hold (c)” rating to a “hold (c+)” rating in a report on Wednesday. UBS Group upgraded Hercules Capital from a “neutral” rating to a “buy” rating and increased their price objective for the stock from $15.50 to $18.50 in a report on Tuesday, September 1st. Finally, LADENBURG THALM/SH SH dropped their target price on Hercules Capital from $21.00 to $20.00 and set a “buy” rating on the stock in a research report on Friday, July 31st. One equities 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’s stock. According to data from MarketBeat.com, the company currently has an average rating of “Moderate Buy” and a consensus target price of $18.89.

Hercules Capital Company Profile

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.