2024-05-10 03:59:12 ET
Summary
- Hercules Capital reported strong results for Q1'24, robust new debt originations and dividend coverage.
- The BDC's portfolio reflects high asset quality. Net interest margins remained fairly stable Q/Q.
- Hercules Capital's strong performance in interest income and net investment income is supported by its focus on income-producing debt.
- With a sky-high P/NAV ratio of 1.70X, shares of Hercules Capital are likely overpriced.
Hercules Capital ( HTGC ) slightly missed consensus estimates with regard to its net investment income in the first quarter, but the BDC continued to deliver strong results in new debt originations. Hercules Capital’s portfolio also continued to reflect a very high safety margin in terms of both asset quality as well as dividend coverage. However, I still have reservations about the company’s very high valuation based off of net asset value which, in my opinion, translates into an unattractive risk profile for dividend investors. Although I see no issues for Hercules Capital's quarterly and supplemental dividends, I believe shares are more than fully valued!...
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Hercules Capital: Solid 10% Yield, But Sky-High Valuation