On Apr 6, Zacks Investment Research upgraded
American Capital Ltd.
) to a Zacks Rank #1 (Strong Buy).
AMER CAP LTD (ACAS): Free Stock Analysis
KCAP FINL INC (KCAP): Free Stock Analysis
NEWSTAR FIN INC (NEWS): Free Stock Analysis
MEDALLION FINL (TAXI): Free Stock Analysis
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Why the Upgrade?
Better-than-expected fourth-quarter results, improving credit
quality and enhanced asset coverage ratio are the primary rank
drivers for this stock. Moreover, this well-known private equity
and venture capital firm delivered an 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.
Positive 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 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.
Moreover, American Capital is expected to announce its
first-quarter 2013 results on Apr 29. The Zacks Consensus
Estimate for the quarter is 28 cents per share. The Zacks
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) for the company is +21.4% for the first quarter. This, along
with its Zacks Rank #1 (Strong Buy), make us confident regarding
a positive earnings surprise call.
Other Stocks to Consider
Among peers of American Capital,
NewStar Financial, Inc.
KCAP Financial Inc.
Medallion Financial Corp.
) carry a Zacks Rank #2 (Buy).