Hercules Capital (HTGC) AI Stock Analysis

• Market Cap: $3.19B
• Dividend Yield: 10.74%
• Average Volume (3M): 1.38M
• Price to Earnings (P/E): 10.2
• Beta (1Y): 0.71
• Revenue Growth: -15.32%
• EPS Growth: -12.29%
• Country: US
• Employees: 100
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.49
• Shares Outstanding: 181,718,080
• 10 Day Avg. Volume: 1,335,173
• 30 Day Avg. Volume: 1,384,705
• PEG Ratio: -0.41
• Price to Book (P/B): 1.63
• Price to Sales (P/S): 7.78
• P/FCF Ratio: -27.24
• Enterprise Value/Market Cap: 1.81
• Enterprise Value/Revenue: 11.78
• Enterprise Value/Gross Profit: 14.31
• Enterprise Value/Ebitda: 18.64
• 1Y Price Target: $20.08
• Price Target Upside: 17.22% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 1.91
• Revenue Forecast (FY): $535.38M

• Rating: 77 Outperform
• Price Target: $20.00 ▲(16.75% Upside)

Hercules Capital's strong earnings performance and attractive valuation are the most significant factors driving the score. The company's robust liquidity and disciplined approach to credit underwriting further support its positive outlook. However, cash flow challenges and market concerns slightly temper the overall score.

Positive Factors

Strong Investment Income

The significant increase in investment income reflects Hercules Capital's ability to generate higher returns from its portfolio, indicating effective management and a strong market position in venture lending.

Robust Liquidity

Maintaining robust liquidity provides Hercules Capital with financial flexibility to capitalize on new investment opportunities and manage obligations, supporting long-term stability and growth.

Growth in Assets Under Management

The growth in assets under management demonstrates Hercules Capital's ability to attract and manage more capital, enhancing its scale and competitive position in the specialty finance sector.

Negative Factors

Increase in Nonaccrual Loans

An increase in nonaccrual loans indicates potential credit risk and could impact future income, highlighting the importance of maintaining stringent credit underwriting standards.

Concerns Over Market Frothiness

Market frothiness can lead to increased competition and riskier lending practices, potentially affecting Hercules Capital's ability to maintain disciplined investment strategies.

Higher Early Loan Repayments

Higher early loan repayments can reduce interest income and impact net debt portfolio growth, challenging Hercules Capital's revenue consistency and growth projections.

Hercules Capital Business Overview & Revenue Model

Company Description

Hercules Capital, Inc. is a business development company. The firm specializing in providing venture debt, debt, senior secured loans, and growth capital to privately held venture capital-backed companies at all stages of development from startups, to expansion stage including select publicly listed companies and select special opportunity lower middle market companies that require additional capital to fund acquisitions, recapitalizations and refinancing and established-stage companies. The firm provides growth capital financing solutions for capital extension; management buy-out and corporate spin-out financing solutions; company, asset specific, or intellectual property acquisition financing; convertible, subordinated and/or mezzanine loans; domestic and international corporate expansion; vendor financing; revenue acceleration by sales and marketing development, and manufacturing expansion. It provides asset-based financing with a focus on cash flow; accounts receivable facilities; equipment loans or leases; equipment acquisition; facilities build-out and/or expansion; working capital revolving lines of credit; inventory. The firm also provides bridge financing to IPO or mergers and acquisitions or technology acquisition; dividend recapitalizations and other sources of investor liquidity; cash flow financing to protect against share price volatility; competitor acquisition; pre-IPO financing for extra cash on the balance sheet; public company financing to continue asset growth and production capacity; short-term bridge financing; and strategic and intellectual property acquisition financings. It also focuses on customized financing solutions, emerging growth, mid venture, and late venture financing. The firm invests primarily in structured debt with warrants and, to a lesser extent, in senior debt and equity investments. The firm generally seeks to invest in companies that have been operating for at least six to 12 months prior to the date of their investment. It prefers to invest in technology, energy technology, sustainable and renewable technology, and life sciences. Within technology the firm focuses on advanced specialty materials and chemicals; communication and networking, consumer and business products; consumer products and services, digital media and consumer internet; electronics and computer hardware; enterprise software and services; gaming; healthcare services; information services; business services; media, content and information; mobile; resource management; security software; semiconductors; semiconductors and hardware; and software sector. Within energy technology, it invests in agriculture; clean technology; energy and renewable technology, fuels and power technology; geothermal; smart grid and energy efficiency and monitoring technologies; solar; and wind. Within life sciences, the firm invests in biopharmaceuticals; biotechnology tools; diagnostics; drug discovery, development and delivery; medical devices and equipment; surgical devices; therapeutics; pharma services; and specialty pharmaceuticals. It also invests in educational services. The firm invests primarily in United States based companies and considers investment in the West Coast, Mid-Atlantic regions, Southeast and Midwest; particularly in the areas of software, biotech and information services. The firm prefers to invest between $10 million to $250 million in equity per transactions. It invests generally between $1 million to $40 million in companies focused primarily on business services, communications, electronics, hardware, and healthcare services. The firm invests primarily in private companies but also have investments in public companies. For equity investments, the firm seeks to represent a controlling interest in its portfolio companies which may exceed 25% of the voting securities of such companies. The firm seeks to invest a limited portion of its assets in equipment-based loans to early-stage prospective portfolio companies. These loans are generally for amounts up to $3 million but may be up to $15 million for certain energy technology venture investments. The firm allows certain debt investments have the right to convert a portion of the debt investment into equity. It also co-invests with other private equity firms. The firm seeks to exit its investments through initial public offering, a private sale of equity interest to a third party, a merger or an acquisition of the company or a purchase of the equity position by the company or one of its stockholders. The firm has structured debt with warrants which typically have maturities of between two and seven years with an average of three years; senior debt with an investment horizon of less than three years; equipment loans with an investment horizon ranging from three to four years; and equity related securities with an investment horizon ranging from three to seven years. The firm prefers to invest through its balance sheet capital. The firm formerly known as Hercules Technology Growth Capital, Inc. Hercules Capital, Inc. was founded in December 2003 and is based in Palo Alto, California with additional offices in Connecticut; Boston, Massachusetts; San Diego, California; Westport, Connecticut; Elmhurst, Illinois; Santa Monica, California; McLean, Virginia; New York, New York; Radnor, Pennsylvania; and Washington, District of Columbia and London, United Kingdom.

How the Company Makes Money

Hercules Capital generates revenue primarily through interest income from its debt investments, which include secured loans and credit facilities to growth-stage companies. The company charges interest rates that are typically higher than traditional bank loans due to the higher risk associated with lending to early-stage companies. Additionally, Hercules earns fees from structuring and origination services, as well as management fees from its investment funds. The company also benefits from equity investments in the companies it finances, allowing it to participate in the growth and success of its portfolio companies. Significant partnerships with venture capital firms and access to a network of innovative companies contribute to Hercules's ability to source high-quality investment opportunities, which further enhances its revenue potential.

Hercules Capital Financial Statement Overview

Summary

Hercules Capital shows strong profitability and revenue growth, supported by a stable balance sheet with low leverage. However, cash flow challenges present potential risks, particularly in liquidity management. The company is well-positioned in terms of profitability and financial stability, but improving cash flow metrics will be crucial for sustaining growth.

Income Statement

Hercules Capital demonstrates strong profitability with a high net profit margin of 54.81% in TTM, supported by a solid EBIT margin of 73.15%. Revenue growth is robust at 13.51% in TTM, indicating a positive trajectory. However, the gross profit margin has decreased compared to previous years, suggesting potential cost pressures.

Balance Sheet

The company maintains a low debt-to-equity ratio of 0.0076 in TTM, reflecting strong financial stability. Return on equity is healthy at 9.12%, although it has decreased from previous years. The equity ratio stands at 49.65%, indicating a balanced capital structure. Overall, the balance sheet is solid, with manageable leverage.

Cash Flow

Cash flow analysis reveals challenges, with negative operating and free cash flows in TTM. The free cash flow to net income ratio is nearly 1, indicating efficient conversion of income to cash. However, the negative cash flow growth and operating cash flow coverage ratio suggest potential liquidity concerns.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	491.59M	430.90M	494.12M	239.39M	309.58M	357.38M
Gross Profit	404.78M	353.75M	426.50M	184.64M	255.13M	297.77M
EBITDA	310.69M	263.43M	337.67M	102.28M	174.47M	227.68M
Net Income	310.35M	262.97M	337.48M	102.08M	174.16M	227.26M
Balance Sheet
Total Assets	4.41B	3.83B	3.42B	3.03B	2.60B	2.62B
Cash, Cash Equivalents and Short-Term Investments	29.27M	113.12M	98.90M	15.80M	133.12M	198.28M
Total Debt	16.59M	1.79B	1.56B	1.58B	1.24B	1.30B
Total Liabilities	2.22B	1.84B	1.61B	1.63B	1.29B	1.33B
Stockholders Equity	2.19B	1.99B	1.80B	1.40B	1.31B	1.29B
Cash Flow
Free Cash Flow	-715.75M	-118.79M	67.39M	-424.91M	128.51M	207.66M
Operating Cash Flow	-715.76M	-118.09M	68.28M	-424.80M	128.62M	207.80M
Investing Cash Flow	-102.68M	-705.00K	-887.00K	-114.00K	-106.00K	-137.00K
Financing Cash Flow	405.97M	119.20M	22.75M	314.52M	-229.87M	-85.04M

Hercules Capital Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 17.13
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For HTGC, the sentiment is Negative. The current price of 17.13 is below the 20-day moving average (MA) of 17.40, below the 50-day MA of 17.76, and below the 200-day MA of 17.67, indicating a bearish trend. The MACD of -0.03 indicates Negative momentum. The RSI at 43.05 is Neutral, neither overbought nor oversold. The STOCH value of 16.49 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HTGC.

Hercules Capital Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
HTGC	77 Outperform	$3.19B	10.22	15.21%	10.74%	-15.32%	-12.29%
GBDC	71 Outperform	$3.69B	9.79	9.33%	11.91%	32.19%	-13.72%
TSLX	70 Outperform	$2.01B	10.41	11.91%	9.27%	-6.44%	-1.18%
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
PFLT	63 Neutral	$913.80M	10.90	7.37%	13.77%	55.25%	-47.71%
FSK	58 Neutral	$4.37B	16.05	4.24%	17.96%	-13.67%	-48.49%
PNNT	48 Neutral	$421.16M	29.96	2.89%	14.88%	-35.46%	-67.15%

Hercules Capital Corporate Events

Hercules Capital Reports Record Growth Amid Market Challenges

Hercules Capital’s recent earnings call painted a picture of robust growth and strategic discipline, despite some market challenges. The company reported record fundings and strong investment income, underscoring a well-managed growth trajectory. Concerns were raised about market frothiness and a slight increase in nonaccrual loans, but these were balanced by stable credit quality and a conservative approach.

Hercules Capital Achieves Record Q3 2025 Financial Results

Hercules Technology Growth Capital, a leading specialty finance company, provides senior secured venture growth loans to high-growth, venture capital-backed companies in the technology and life sciences sectors.

Hercules Capital Announces Q3 Cash Distribution

On October 28, 2025, Hercules Capital announced a third quarter cash distribution of $0.47 per share, payable in November 2025. The company reported record financial results for Q3 2025, including total new debt and equity commitments of $846.2 million and total fundings of $504.6 million. Hercules achieved a net investment income of $88.6 million, providing 122% coverage of its base cash distribution. The company also received an investment grade rating upgrade from Moody’s and reported a 20.7% year-over-year increase in assets under management, reaching approximately $5.5 billion.

The most recent analyst rating on (HTGC) stock is a Hold with a $18.50 price target. To see the full list of analyst forecasts on Hercules Capital stock, see the HTGC Stock Forecast page.