Balanced Risk-Reward for American Capital - Analyst Blog

By
A A A

On May 15, 2014, we issued an updated research report on American Capital, Ltd. ( ACAS ). The company recently reported disappointing first-quarter 2014 results that reflected higher operating expenses and a declining top line. However, new investments and realization from portfolios were the positives.

Notably, in the quarter, the company made new investments worth $321 million in operating companies and recorded $442 million of cash proceeds from the realization of portfolio investments. We expect the company to continue to have strong investment opportunities this year as it is expected to utilize capital to invest in new companies and at the same time offer additional finance to the existing ones.

American Capital reported earnings of 2 cents per share, significantly lagging the Zacks Consensus Estimate of 22 cents. Also, this was below 14 cents earned in the previous quarter. Net operating income for the quarter came in at $5 million, substantially down from $38 million reported in the earlier quarter.


With this, the company missed the Zacks Consensus Estimate in the last four quarters by an average of 74.25%.

Going forward, the high debt level may weigh on the company's financials. As of Mar 31, 2014, American Capital's total debt was $790 million.

Following first-quarter 2014 results, the Zacks Consensus Estimate for 2014 decreased 7.6% to 85 cents per share while it increased 8.3% to $1.04 for 2015, over the last 30 days. American Capital currently carries a Zacks Rank #3 (Hold).

Key Picks from the Sector

Some better-ranked stocks worth considering include Fifth Street Senior Floating Rate Corp. ( FSFR ), Great Southern Bancorp Inc. ( GSBC ) and Anchor Bancorp ( ANCB ). All these carry a Zacks Rank #1 (Strong Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMER CAP LTD (ACAS): Free Stock Analysis Report

ANCHOR BANCORP (ANCB): Get Free Report

FIFTH ST SNR FR (FSFR): Free Stock Analysis Report

GREAT SOUTH BCP (GSBC): 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 , ANCB , FSFR , GSBC

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

What to Wear to a Wedding
What to Wear to a Wedding           
4th of July Outfits
4th of July Outfits                 

Stocks

Referenced

Most Active by Volume

62,287,287
  • $17.03 ▼ 1.10%
26,194,993
  • $30.555 ▲ 1.24%
26,150,957
  • $126.44 ▼ 0.13%
25,197,634
  • $40.59 ▼ 6.26%
25,192,083
  • $19.07 ▲ 1.54%
24,563,617
  • $26.78 ▲ 0.45%
24,474,256
  • $5.85 ▲ 1.56%
24,111,132
  • $8.83 ▲ 2.08%
As of 7/2/2015, 04:15 PM

Find a Credit Card

Select a credit card product by:
Select an offer:
Search
Data Provided by BankRate.com