Neutral on American Capital - Analyst Blog
28 3월 2012 - 9:45PM
Zacks
We have reaffirmed our Neutral recommendation on
American Capital Ltd. (ACAS), following a detailed
analysis of the company’s fundamentals in light of the current
economic environment and the restructuring initiatives by the
company.
American Capital’s fourth-quarter 2011 operating income of 24
cents per share surpassed the Zacks Consensus Estimate by 4 cents.
Moreover, the results outshined the prior-year quarter’s earnings
by 5 cents per share. The favorable result was due to a rise in fee
as well as interest and dividend income in the quarter.
Including deferred tax benefit of $428 million recorded in the
quarter, net operating income for the quarter was $229 million, or
67 cents per share, significantly up from $67 million or 19 cents
per share in the prior-year quarter.
In February 2012, American Capital announced the divesture of
its portfolio company Aptara Inc., following the divesture of other
portfolio company-CIBT Solutions Inc. (CIBT) in January. Moreover,
in October 2011, the company had announced the divestiture of its
portfolio company Sixnet Holdings LLC. We expect these
restructuring initiatives to significantly reduce operating
costs.
During the second half of 2011, American Capital repurchased a
total of 17.6 million shares of its common stock in the open market
for $134 million. The average purchase price was $7.61 per share.
American Capital foresees additional stock repurchases or dividend
payments by the end of December 2012.
The authorization of the new share buyback program and
resumption of dividend payments raise our hopes for enhanced
investor confidence in the company.
American Capital’s successful restructuring of debt provided it
with sufficient operating flexibility and the company also
continues to lessen risk from its balance sheet through a number of
initiatives including repayment of debt. Moreover, new investment
opportunities are expected to continue along with the economic
recovery.
However, we believe earnings are affected by the spread between
the interest rate on investments and the interest rate at which the
company has borrowed funds. An increase or decrease in interest
rates could reduce the spread between the investment rate and the
borrowing rate, thereby, adversely affecting the overall
profitability. An unsettled economic environment is also a cause of
concern.
We believe that the risk-reward profile for American Capital is
currently balanced and hence, we have reiterated our Neutral
recommendation on the shares. American Capital currently retains
its Zacks #3 Rank, which translates into a short-term ‘Hold’
rating. One of American Capital’s peers, Ares Capital
Corporation (ARCC) retains a Zacks #2 Rank (a short-term
‘Buy’ rating).
AMER CAP LTD (ACAS): Free Stock Analysis Report
ARES CAP CP (ARCC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
American Capital Strategies (NASDAQ:ACAS)
과거 데이터 주식 차트
부터 6월(6) 2024 으로 7월(7) 2024
American Capital Strategies (NASDAQ:ACAS)
과거 데이터 주식 차트
부터 7월(7) 2023 으로 7월(7) 2024