National Securities restated their buy rating on shares of Monroe Capital (NASDAQ:MRCC) in a report issued on Monday. The firm currently has a $17.00 price target on the financial services provider’s stock.
“• Monroe posted adjusted NII/share of $0.42 for 1Q18 versus our estimate of $0.36 and the dividend of $0.35. The earnings beat was largely attributable to the incentive fee not earned in full given the NAV decline Q/Q to $13.49 from $13.77.
• We expect Monroe to ramp its balance sheet leverage through 2019 as the company likely takes advantage of reduced asset coverage requirements. Monroe received Board approval to do so but is also seeking shareholder approval next month in order to expedite when the increased leverage is permitted, although we do not expect the company to exceed 1:1 on a regulatory basis through 2019.
• This should lead to very good earnings growth the next two years from what will likely be continued increases in NII ROAE. Another tailwind for effective yield and earnings will likely be increases in the SLF (senior loan fund) which comprised only 3.1% of the portfolio at cost as of 3/31/18. We expect Monroe to prioritize capital allocation to the SLF as credit spreads remain tight and the loan market highly competitive.
• The NAV decline on the quarter was a result of further write-downs on the usual suspects: TPP Operating Inc. and Rockdale Blackhawk. Rockdale was written down by another $2.3 million Q/Q ($0.11/share) and TPP was written down by $4.8 million ($0.24/share). TPP is now marked at 17% of cost and while we would like to think that’s the floor, given how troubled retail is, we would not be surprised to see further write-downs. However, we think as MRCC grows its portfolio and the investments have already been written down substantially that these two companies will not be as impactful on NAV going forward.
• We are revising our 2018 adjusted NII/share estimate to $1.51 from $1.47 and our 2019 adjusted NII/share estimate to $1.58 from $1.51.,” the firm’s analyst wrote.
Other research analysts have also issued reports about the stock. BidaskClub upgraded shares of Monroe Capital from a strong sell rating to a sell rating in a research note on Thursday, March 22nd. Zacks Investment Research upgraded shares of Monroe Capital from a sell rating to a hold rating in a research note on Wednesday, January 31st. ValuEngine lowered shares of Monroe Capital from a hold rating to a sell rating in a research note on Wednesday, May 2nd. TheStreet lowered shares of Monroe Capital from a b- rating to a c rating in a research note on Wednesday, April 11th. Finally, B. Riley assumed coverage on shares of Monroe Capital in a research note on Tuesday, March 27th. They issued a neutral rating and a $13.50 target price on the stock. One investment analyst has rated the stock with a sell rating, three have given a hold rating and two have issued a buy rating to the company. The stock presently has an average rating of Hold and a consensus target price of $15.50.
Monroe Capital (NASDAQ:MRCC) last announced its quarterly earnings results on Tuesday, May 8th. The financial services provider reported $0.42 EPS for the quarter, topping the Thomson Reuters’ consensus estimate of $0.35 by $0.07. Monroe Capital had a net margin of 20.30% and a return on equity of 10.16%. The company had revenue of $14.95 million for the quarter, compared to analyst estimates of $14.69 million. equities research analysts forecast that Monroe Capital will post 1.52 earnings per share for the current fiscal year.
In other news, Chairman Theodore L. Koenig bought 27,367 shares of the stock in a transaction that occurred on Friday, March 16th. The shares were acquired at an average cost of $12.36 per share, for a total transaction of $338,256.12. The transaction was disclosed in a document filed with the SEC, which is available at this hyperlink. Company insiders own 1.80% of the company’s stock.
A number of large investors have recently bought and sold shares of the stock. Ladenburg Thalmann Financial Services Inc. grew its position in Monroe Capital by 28.5% in the 1st quarter. Ladenburg Thalmann Financial Services Inc. now owns 172,099 shares of the financial services provider’s stock worth $2,117,000 after purchasing an additional 38,160 shares during the last quarter. Mckinley Capital Management LLC Delaware grew its position in Monroe Capital by 9.3% in the 1st quarter. Mckinley Capital Management LLC Delaware now owns 137,220 shares of the financial services provider’s stock worth $1,688,000 after purchasing an additional 11,622 shares during the last quarter. Opus Capital Group LLC grew its position in Monroe Capital by 980.5% in the 1st quarter. Opus Capital Group LLC now owns 135,694 shares of the financial services provider’s stock worth $1,669,000 after purchasing an additional 123,136 shares during the last quarter. BlackRock Inc. grew its position in Monroe Capital by 8.9% in the 4th quarter. BlackRock Inc. now owns 129,810 shares of the financial services provider’s stock worth $1,785,000 after purchasing an additional 10,660 shares during the last quarter. Finally, Millennium Management LLC grew its position in Monroe Capital by 589.4% in the 4th quarter. Millennium Management LLC now owns 119,475 shares of the financial services provider’s stock worth $1,643,000 after purchasing an additional 102,144 shares during the last quarter. Institutional investors and hedge funds own 29.36% of the company’s stock.
Monroe Capital Company Profile
Monroe Capital Corporation is a closed-end, non-diversified management investment company. The Company is a specialty finance company focused on providing financing primarily to lower middle-market companies in the United States and Canada. The Company’s investment objective is to maximize the total return to its stockholders in the form of current income and capital appreciation primarily through investments in senior, unitranche and junior secured debt, and unsecured subordinated debt and equity.
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