Hercules Capital Inc.’s HTGC fourth-quarter 2024 net investment income of 49 cents per share matched the Zacks Consensus Estimate. The bottom line, however, declined 12.5% from the year-ago quarter.

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Results primarily benefited from a decent balance sheet position and robust funding commitments. However, lower net investment income and a rise in operating expenses were headwinds.

Net investment income was $81.1 million, down 5.7% year over year.

For 2024, net investment income per share of $2.00 lagged the consensus estimate of $2.01 and declined 3.8% year over year. Net investment income was $325.8 million, up 7.2% from 2023.

HTGC Investment Income Down, Expenses Rise

Total investment income in the fourth quarter was $121.8 million, down marginally from the year-ago quarter. Also, the top line lagged the Zacks Consensus Estimate of $124.09 million. The fall was mainly due to a lower weighted average yield on the debt investment portfolio.

For 2024, total investment income grew 7.1% to $493.6 million. The top line lagged the Zacks Consensus Estimate of $495.9 million.

Total gross operating expenses jumped 13.9% to $43.5 million. The rise was due to an increase in all cost components except loan fees.

HTGC Portfolio Value & New Commitments Remain Solid

The fair value of Hercules Capital’s total investment portfolio was $3.66 billion as of Dec. 31, 2024.

In the fourth quarter, the company delivered $619.5 million in gross new debt and equity commitments and $468 million in gross new funding. It realized early loan repayments of $225.2 million.

Hercules Capital’s Balance Sheet Position Decent

As of Dec. 31, 2024, Hercules Capital’s net asset value was $11.66 per share, up from $11.43 as of Dec. 31, 2023.

As of Dec. 31, 2024, the company had $658.8 million in liquidity, including $113.1 million of unrestricted cash and cash equivalents, and $545.7 million in credit facilities and SBA debenture.

At the end of the quarter, the weighted average cost of debt, comprising interest and fees, was 5%, up from 4.9% at the end of the prior-year quarter.

Our View on HTGC Stock

Hercules Capital’s absence of global diversification limits the company’s growth prospects. Further, efforts to improve originations will likely keep expenses elevated, hurting bottom-line expansion. Nonetheless, rising demand for customized financing will likely aid total investment income.
 

Hercules Capital Stock Price, Consensus and EPS Surprise

Hercules Capital, Inc. price-consensus-eps-surprise-chart | Hercules Capital, Inc. Quote

Currently, Hercules Capital carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Finance Companies

The Carlyle Group Inc. CG reported fourth-quarter 2024 post-tax distributable earnings per share of 92 cents, which missed the Zacks Consensus Estimate by 8%. The figure compared favorably with earnings of 86 cents per share in the year-ago quarter.

CG’s results were hurt by an increase in expenses. However, an increase in segment fee revenues and a rise in assets under management (AUM) balance offered support. 

Ares Capital Corporation’s ARCC fourth-quarter 2024 core earnings of 55 cents per share missed the Zacks Consensus Estimate of 58 cents. The bottom line reflects a decline of 12.7% from the prior-year quarter.

The results were primarily affected by an increase in expenses. Nonetheless, an improvement in the total investment income and the company’s robust portfolio activities supported ARCC’s results to some extent.

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