American Capital Earnings: Here’s Why Shares are Down Now

American Capital, Ltd. (NASDAQ:ACAS) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1.71%.

American Capital, Ltd. Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 44.83% to $0.16 in the quarter versus EPS of $0.29 in the year-earlier quarter.

Revenue: Decreased 57.79% to $130 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: American Capital, Ltd. reported adjusted EPS income of $0.16 per share. By that measure, the company missed the mean analyst estimate of $0.25. It missed the average revenue estimate of $137.54 million.

Quoting Management: “We were very pleased with generating $150 million of realizations from portfolio exits, which were at values 4.8% above the fair market value of these investments at the end of the previous quarter, although we were disappointed that the quality and pricing of middle market investment opportunities limited our commitments to $50 million for the quarter,” said Gordon O’Brien, President, Specialty Finance and Operations. “Despite this, we are working on several attractive opportunities for new Operating Companies and add-on acquisitions. With our large portfolio of Operating Companies, our One-Stop Buyout® capability, our ability to make unitranche, second lien and mezzanine investments, we continue to have a competitive advantage when quality investment opportunities become available.”

Key Stats (on next page)…

Revenue decreased 69.05% from $420 million in the previous quarter. EPS decreased 23.81% from $0.21 in the previous quarter.

Looking Forward: Analysts have a more negative outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has fallen from a profit of $0.28 to a profit $0.26. For the current year, the average estimate has moved down from a profit of $1.1 to a profit of $0.98 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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