National Securities reaffirmed their neutral rating on shares of Main Street Capital (NYSE:MAIN) in a research note published on Monday morning. The brokerage currently has a $38.00 target price on the financial services provider’s stock.
“ Main Street posted NII/share of $0.63 for 3Q18, matching our estimate and comfortably ahead of the $0.57/share regular quarterly dividend. The company guided towards DNII/share (NII + share-based compensation) of $0.63-$0.65 for 4Q18, which we think is a roughly $0.04/share difference from NII (NII/share likely $0.59-$0.61).
We expect the guidance being lower than 3Q18 numbers is likely in anticipation of reduced fee income which was $3.4 million for 3Q18 compared with $1.9 million the quarter prior. Notably, total repayments increased Q/Q to $198.9 million from $148.0 million which we expect drove the elevated fee income. For 4Q18, we model total repayments to decline to $146.1 million and fee income to fall concomitant with this to $1.7 million.
The company has decided to phase out its supplemental dividend policy. As a reminder, MAIN typically pays a supplemental dividend in both the second and fourth quarters of the year as a result of its realized gains. The company will begin to reduce the supplemental dividends and increase the base dividend beginning in 2Q19 with the supplemental dividend being reduced to $0.25/share from $0.275/share and the regular dividend being increased to $0.60/share from $0.57/share.
NAV/share increased 3.1% Q/Q to $24.69 from $23.96 as the positive feedback loop of MAIN being permitted to issue shares significantly above NAV combined with an out-earned dividend and sound asset quality continued to lift NAV. The company sold $18.6 million of equity in 3Q18 at an average price of $39.71, representing a 66% premium to 2Q18 NAV/share.
We are revising our 2018 NII/share estimate to $2.52 from $2.55 and our 2019 NII/share estimate to $2.63 from $2.66 and maintaining our NEUTRAL rating and our $38 price target.,” the firm’s analyst wrote.
A number of other equities research analysts also recently commented on MAIN. Raymond James upgraded Main Street Capital from a market perform rating to an outperform rating and set a $41.00 target price on the stock in a research report on Monday. They noted that the move was a valuation call. Janney Montgomery Scott set a $35.00 target price on Main Street Capital and gave the stock a hold rating in a research report on Friday. SunTrust Banks reiterated a hold rating and issued a $40.00 target price on shares of Main Street Capital in a research report on Friday, August 3rd. Finally, Zacks Investment Research downgraded Main Street Capital from a buy rating to a hold rating in a research report on Thursday, October 4th. Four analysts have rated the stock with a hold rating and three have given a buy rating to the company. The company presently has a consensus rating of Hold and an average target price of $39.50.
Shares of NYSE MAIN traded up $0.27 during mid-day trading on Monday, reaching $38.67. The company’s stock had a trading volume of 68,389 shares, compared to its average volume of 305,622. The firm has a market cap of $2.25 billion, a price-to-earnings ratio of 16.18 and a beta of 0.83. The company has a quick ratio of 0.11, a current ratio of 0.11 and a debt-to-equity ratio of 0.21. Main Street Capital has a 52 week low of $34.37 and a 52 week high of $41.79.
Main Street Capital (NYSE:MAIN) last released its quarterly earnings data on Thursday, November 1st. The financial services provider reported $0.63 earnings per share for the quarter, topping analysts’ consensus estimates of $0.62 by $0.01. The firm had revenue of $58.26 million during the quarter, compared to analyst estimates of $59.19 million. Main Street Capital had a return on equity of 10.80% and a net margin of 95.77%. The business’s quarterly revenue was up 12.5% compared to the same quarter last year. During the same quarter in the prior year, the company posted $0.60 earnings per share. Research analysts expect that Main Street Capital will post 2.53 EPS for the current fiscal year.
The business also recently disclosed a monthly dividend, which will be paid on Tuesday, January 15th. Shareholders of record on Monday, December 31st will be given a dividend of $0.195 per share. The ex-dividend date of this dividend is Friday, December 28th. This represents a $2.34 dividend on an annualized basis and a yield of 6.05%. Main Street Capital’s dividend payout ratio (DPR) is presently 97.91%.
A number of hedge funds have recently modified their holdings of the business. Financial Management Professionals Inc. raised its position in Main Street Capital by 4.8% during the second quarter. Financial Management Professionals Inc. now owns 27,576 shares of the financial services provider’s stock valued at $1,050,000 after purchasing an additional 1,274 shares during the period. Verity Asset Management Inc. raised its position in Main Street Capital by 20.8% during the second quarter. Verity Asset Management Inc. now owns 7,429 shares of the financial services provider’s stock valued at $283,000 after purchasing an additional 1,279 shares during the period. BlueMountain Capital Management LLC raised its position in Main Street Capital by 17.1% during the second quarter. BlueMountain Capital Management LLC now owns 10,255 shares of the financial services provider’s stock valued at $390,000 after purchasing an additional 1,499 shares during the period. Northern Trust Corp raised its position in Main Street Capital by 5.8% during the first quarter. Northern Trust Corp now owns 31,741 shares of the financial services provider’s stock valued at $1,171,000 after purchasing an additional 1,729 shares during the period. Finally, Accurate Investment Solutions Inc. raised its position in Main Street Capital by 1.6% during the third quarter. Accurate Investment Solutions Inc. now owns 110,507 shares of the financial services provider’s stock valued at $4,255,000 after purchasing an additional 1,777 shares during the period. Institutional investors and hedge funds own 23.94% of the company’s stock.
Main Street Capital Company Profile
Main Street Capital Corporation is a business development company specializing in long- term equity and debt investments in small and lower middle market companies. The firm focuses on investments in, subordinated loans, private equity, venture debt, mezzanine investments, mature, mid venture, industry consolidation, later stage, late venture, emerging growth, management buyouts, change of control transactions, ownership transitions, recapitalizations, strategic acquisitions, refinancing, business expansion capital, growth financings, family estate planning, and other growth initiatives primarily for later stage businesses.
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