Updated Research Report on American Capital - Analyst Blog
February 24 2014 - 7:30PM
Zacks
On Feb 19, 2014, we issued an updated research report on
American Capital, Ltd. (ACAS). The company
recently reported dismal fourth-quarter 2013 results that reflected
higher operating expenses and a declining top line. We believe a
low interest-rate environment and regulatory issues may continue to
pressure top-line growth in the upcoming quarters.
American Capital reported earnings of 14 cents per share, lagging
the Zacks Consensus Estimate of 11 cents. Also, this was below 26
cents earned in the prior-year quarter. Net operating income for
the quarter came in at $38 million, significantly down from $83
million reported in the prior-year quarter.
With this, the company missed the Zacks Consensus Estimate in all
four quarters of 2013 by an average of 64.0%.
Total operating revenue stood at $118 million for the quarter, down
34% from the prior-year quarter. This was primarily due to lower
interest and dividend income.
Though American Capital is focused on expense management, the
quarter in review witnessed a 2% year-over-year increase in its
operating expenses. This was primarily driven by elevated salaries,
benefits and stock-based compensation.
Going forward, the high debt level may weigh on the company’s
financials. As of Dec 31, 2013, American Capital’s total debt stood
at $791 million.
Weak fundamentals and dismal results at American Capital triggered
a downward revision in the Zacks Consensus Estimate, as analysts
turned more bearish on the stock’s future performance. This is
evident from the movement witnessed in the Zacks Consensus Estimate
over the past 30 days. For 2014, it decreased 7.3% to $1.02 per
share while it declined 28.4% to $1.01 for 2015.
American Capital currently carries a Zacks Rank #5 (Strong
Sell).
Key Picks from the Sector
Some better-ranked stocks worth considering include Apollo
Investment Corp. (AINV), Gladstone Investment
Corp. (GAIN) and Horizon Technology Finance
Corp. (HRZN). All these carry a Zacks Rank #2 (Buy).
AMER CAP LTD (ACAS): Free Stock Analysis Report
APOLLO INV CP (AINV): Free Stock Analysis Report
GLADSTONE INVES (GAIN): Free Stock Analysis Report
HORIZON TECHNOL (HRZN): Free Stock Analysis Report
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