Hercules Capital, Inc. (NYSE: HTGC)

Sector: Financial Services Industry: Asset Management CIK: 0001280784
Market Cap 2.83 Bn
P/B 1.28
P/E 8.34
P/S 5.32
ROIC (Qtr) 9.68
Div Yield % 11.87
Rev 1y % (Qtr) 12.85
Total Debt (Qtr) 2.30 Bn
Debt/Equity (Qtr) 1.04
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About

Hercules Capital, Inc., often recognized by its stock symbol HTGC, operates in the specialty finance industry. The company primarily generates revenue through investments in debt securities, specializing in Structured Debt. Its operations span across various technology, life sciences, and sustainable and renewable technology industries. Hercules Capital's main business activities involve providing financing solutions to high-growth, innovative venture capital-backed and institutional-backed companies. These activities are carried out in several...

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Investment thesis

Bull case

No data available.

Bear case

  • Operating cash flow of (425.80M) provides thin coverage of dividend payments of (325.99M) with a 1.31 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • The company's operating cash flow of (425.80M) shows concerning coverage of stock compensation expenses of 14.79M, with a -28.79 ratio indicating potential earnings quality issues.
  • Free cash flow of (425.89M) provides weak coverage of capital expenditures of 89000, with a -4785.28 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of (425.80M) provides minimal -73.35x coverage of tax expenses of 5.80M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of (425.89M) represents just -0.86x of debt issuance 496.98M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Peer comparison

Companies in the Asset Management
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 BLK BlackRock, Inc. 199.59 Bn 85.40 21.98 15.04 Bn
2 BN BROOKFIELD Corp /ON/ 103.94 Bn 31.52 5.64 262.97 Bn
3 AMP Ameriprise Financial Inc 88.69 Bn 55.02 7.20 5.89 Bn
4 BX Blackstone Inc. 88.51 Bn 49.39 10.93 12.89 Bn
5 KKR KKR & Co. Inc. 55.86 Bn 28.33 13.23 53.12 Bn
6 STT State Street Corp 46.52 Bn 21.77 3.91 34.72 Bn
7 NTRS Northern Trust Corp 34.14 Bn 33.31 6.71 15.64 Bn
8 RJF Raymond James Financial Inc 32.89 Bn 37.63 4.14 5.10 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 1.08 0.94
EV to Cash from Ops. EV/CFO -11.62 41.10
EV to Debt EV to Debt 2.15 15.28
EV to EBIT EV/EBIT 11.31 23.47
EV to EBITDA EV/EBITDA 11.25 47.80
EV to Free Cash Flow [EV/FCF] EV/FCF -11.62 38.62
EV to Market Cap EV to Market Cap 1.75 7.81
EV to Revenue EV/Rev 9.30 27.38
Price to Book Value [P/B] P/B 1.28 2.34
Price to Earnings [P/E] P/E 8.34 11.81
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 1.04 4.66
Dividend Payout Ratio % Div Payout % (Qtr) 98.90 -5.56
Dividend per Basic Share Div per Share (Qtr) 1.88 1.73
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) -78.30 49.83
Interest Coverage Int. cover (Qtr) 4.75 25.16
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 87.38 -35.10
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -48.93 15.43
Dividend Growth (1y) % Div 1y % (Qtr) -2.08 1.65
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 27.16 -90.82
EBITDA Growth (1y) % EBITDA 1y % (Qtr) 7.51 35.24
EBIT Growth (1y) % EBIT 1y % (Qtr) 26.53 -22.13
EBT Growth (1y) % EBT 1y % (Qtr) 28.55 -163.05
EPS Growth (1y) % EPS 1y % (Qtr) 18.01 -20.61
FCF Growth (1y) % FCF 1y % (Qtr) -258.51 220.21
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.88 -53.96
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.12 0.22
Cash Payout Ratio Cash Payout (Qtr) -0.77 0.36
Cash Ratio Cash Ratio 0.00 0.38
Current Ratio Current Ratio 0.00 0.86
Debt to Equity Ratio Debt/Equity (Qtr) 1.04 0.70
Interest Cover Ratio Int Coverage (Qtr) 4.75 25.16
Times Interest Earned Times Interest Earned (Qtr) 4.75 25.16
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 82.30 -114.76
EBIT Margin % EBIT Margin % (Qtr) 82.20 -127.24
EBT Margin % EBT Margin % (Qtr) 64.89 -150.97
Gross Margin % Gross Margin % (Qtr) 100.00 67.88
Net Profit Margin % Net Margin % (Qtr) 63.80 -148.68