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Main Street Capital's (NYSE:MAIN) Q4 earnings are estimated to benefit from a net fair value increase of investment portfolio.
The business development company is scheduled to announce Q4 earnings results on Thursday, February 22nd, after market close.
The company had posted a Q3 beat as the performance of most of its lower middle market and private loan portfolio companies continued to go strong. Additionally, there was also a significant contribution from its asset management business.
MAIN's Q4'22 top- and bottom-lines remained above average analyst estimates as higher average levels of investment portfolio debt investments, as well as an increase in interest rates on floating rate investment portfolio debt investments, boded well for its total investment income.
The company estimates near record net investment income in Q4'23, with net asset value per share rising 3.0%-3.2% primarily due to the net fair value increase of the investment portfolio during the quarter. The BDC also said it originated new or increased commitments in its private loan portfolio during the quarter.
The consensus EPS estimate for the quarter is $1.07 (+3.9% Y/Y) and the consensus revenue estimate is $127.55M (+12.0% Y/Y).
Over the last 2 years, MAIN has beaten EPS estimates 100% of the time and revenue estimates 75% of the time.
Over the last 3 months, EPS and revenue estimates have seen 3 upward revisions and 0 downward revisions.
Notably, the quarterly earnings season remained solid across most of the MAIN's peers. Ares Capital posted better-than-expected Q4 earnings as interest income from its investments bolstered its net investment income. Golub Capital BDC's earnings for fiscal Q1 managed to exceed the average analyst estimate. Net asset value per share ticked up during the quarter.
Main Street Capital is confident in its portfolio investment approach and expects continued growth in NAV per share, Seeking Alpha author JR Research said.
The company consistently trades at a significant premium to its NAV/share due to a self-reinforcing speculative cycle, and its ability to raise equity above NAV allows it to cover losses, unlike most BDCs, SA contributor Bashar Issa said.
The management's capital allocation approach is exceptional in terms of mitigating risks, which makes a 6.4% dividend yield safe, according to SA analyst Dair Sansyzbayev.
SA analysts and the Quant Rating system rate the stock a Buy. Meanwhile, the sell-side analysts grade the stock a Hold, with an average price target of $44.50. MAIN is currently trading at ~$45.