American Capital Upped to Strong Buy - Analyst Blog

By
A A A

On Feb 26, Zacks Investment Research upgraded American Capital, Ltd. ( ACAS ) 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 #1 include NewStar Financial, Inc. ( NEWS ) while Marlin Business Services Corp. ( MRLN ) and Horizon Technology Finance Corporation ( HRZN ) carry a Zacks Rank #2 (Buy).



AMER CAP LTD (ACAS): Free Stock Analysis Report

HORIZON TECHNOL (HRZN): Free Stock Analysis Report

MARLIN BUS SVCS (MRLN): Free Stock Analysis Report

NEWSTAR FIN INC (NEWS): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ACAS , HRZN , MRLN , NEWS

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

104,156,900
  • $3.94 ▲ 3.14%
68,342,306
  • $7.29 ▼ 6.06%
53,403,174
  • $30.7226 ▼ 5.56%
50,479,314
    $23.005 unch
44,729,249
  • $15.3101 ▼ 1.73%
43,015,359
  • $96.0401 ▼ 2.15%
37,553,578
  • $45.43 ▼ 1.88%
34,390,054
  • $95.204 ▼ 1.83%
As of 7/31/2014, 02:56 PM