On Feb 26, Zacks Investment Research upgraded
American Capital, Ltd.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
American Capital has been witnessing rising earnings estimates on
the back of strong fourth-quarter 2012 results. Moreover, this
well-known private equity and venture capital firm delivered
average earnings surprise of 37.4% in the last four quarters.
American Capital reported fourth-quarter results on Feb 11.
Earnings per share came in at 26 cents, beating the Zacks
Consensus Estimate by a penny but significantly lower than the
prior-year quarter's earnings of 67 cents.
Better-than-expected results were attributable to top-line
growth, followed by decreased operating expenses reflecting
prudent expense management. Moreover, new investments and
reduction of debt acted as positives. Yet, the low interest
environment during the quarter was a negative.
As of Dec 31, 2012, non-accrual loans were $177 million,
representing 9% of total loans at fair value, down from $252
million of non-accrual loans, indicating 12.5% of total loans at
fair value, as of Sep 30, 2012. Moreover, American Capital's
asset coverage ratio improved substantially to 801% at the end of
2012 from 465% in the prior year.
The Zacks Consensus Estimate for 2013 increased 3.8% to $1.09 per
share as 5 out of 9 estimates were revised higher over the last
30 days. For 2014, 1 of the 6 estimates was revised higher over
the same time frame, lifting the Zacks Consensus Estimate by 0.9%
to $1.15 per share.
Other Stocks to Consider
Among its peers, companies in the same industry with a Zacks Rank
NewStar Financial, Inc.
Marlin Business Services Corp.
Horizon Technology Finance Corporation
) carry a Zacks Rank #2 (Buy).
AMER CAP LTD (ACAS): Free Stock Analysis
HORIZON TECHNOL (HRZN): Free Stock Analysis
MARLIN BUS SVCS (MRLN): Free Stock Analysis
NEWSTAR FIN INC (NEWS): Free Stock Analysis
To read this article on Zacks.com click here.