Hercules Capital, Inc. (HTGC) AI Stock Analysis

• Market Cap: $2.77B
• Dividend Yield: 10%
• Average Volume (3M): 2.51M
• Price to Earnings (P/E): 8.1
• Beta (1Y): 0.77
• Revenue Growth: -15.32%
• EPS Growth: -12.29%
• Country: US
• Employees: 100
• Sector: Financial
• Sector Strength: 70
• Industry: Asset Management
• EPS (TTM): 0.48
• Shares Outstanding: 183,695,430
• 10 Day Avg. Volume: 3,955,007
• 30 Day Avg. Volume: 2,513,448
• PEG Ratio: 0.56
• Price to Book (P/B): 1.54
• Price to Sales (P/S): 6.22
• P/FCF Ratio: -7.99
• Enterprise Value/Market Cap: 1.75
• Enterprise Value/Revenue: 8.88
• Enterprise Value/Gross Profit: 10.18
• Enterprise Value/Ebitda: 13.29
• 1Y Price Target: $19.05
• Price Target Upside: 23.46% Upside
• Rating Consensus: Strong Buy
• Number of Analyst Covering: 5
• EPS Forecast (FY): 2.02
• Revenue Forecast (FY): $593.43M

• Rating: 62 Neutral
• Price Target: $17.50 ▲(13.42% Upside)
• Action: Downgraded Date: 02/14/26
• Date: Action: Downgraded 02/14/26

The score is held back primarily by weak cash-flow reliability and the 2025 earnings disruption (zero net income), alongside bearish technical momentum. Offsetting these are a supportive valuation (low P/E and high yield) and a constructive earnings call highlighting strong origination momentum, solid dividend coverage, and good liquidity/credit positioning.

Positive Factors

Origination and AUM scale expansion

Sustained record originations and large new commitments expand the firm’s lending pipeline and fee-bearing franchise. Higher deal flow and platform scale support repeat deployment, diversified income streams, and improved competitive position in venture lending over the medium term.

Significant deleveraging and stronger balance sheet

A materially lower leverage profile meaningfully raises balance-sheet resilience and reduces sensitivity to funding stress. This structural deleveraging increases capacity to absorb shocks, pursue new investments, and maintain distributions through volatile market cycles.

Ample liquidity and solid distribution coverage

Robust near-term liquidity and NII coverage support the sustainability of base and supplemental payouts. Strong coverage reduces immediate dividend risk, underpins investor confidence, and provides time to monetize or reposition assets without forced asset sales.

Negative Factors

Weak operating cash flow conversion

Persistent negative operating and free cash flows signal inconsistent cash conversion from accrual income, increasing dependence on external funding or capital markets. Over months this raises funding risk, constrains reinvestment, and pressures distribution sustainability despite reported NII.

Revenue volatility and 2025 earnings disruption

A sudden drop to zero reported net income after prior profitability highlights earnings volatility and potential below-the-line pressures. Such inconsistency reduces predictability of returns, weakens ROE, and complicates forecasting for distributions and capital allocation over the medium term.

PIK income concentration

Material reliance on payment-in-kind income increases earnings that are non-cash and can mask true cash yield. Elevated PIK as a revenue source elevates credit and cash-flow monitoring needs and can impair near-term liquidity and recoverability under stress scenarios.

Hercules Capital, Inc. 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 the debt investments it makes in its portfolio companies. The company typically provides secured loans with attractive interest rates, which can include warrants or equity kickers that enhance returns. Additionally, HTGC earns management fees from its investment activities and may also generate income from prepayment fees when borrowers pay off their loans early. The company benefits from partnerships with venture capital firms, which help identify promising growth-stage companies, and its strong focus on sectors like technology and life sciences allows it to capitalize on high-demand markets. Overall, Hercules Capital's earnings are driven by a combination of interest income, management fees, and capital gains from equity investments.

Hercules Capital, Inc. Financial Statement Overview

Summary

Mixed fundamentals: historically strong profitability and a much improved 2025 balance sheet from sharp deleveraging, but weakening revenue trends, a drop to zero net income in 2025, and notably negative operating/free cash flow in 2024–2025 weigh heavily on overall quality and consistency.

Income Statement

Revenue has been volatile, with declines in 2024 (-0.1%) and 2025 (-8.1%) after growth in 2023, signaling a softer top-line trajectory. Profitability was strong through 2024 with high gross and operating profitability (2024 net margin ~61%), but 2025 shows net income dropping to zero despite solid EBITDA margin (~54%), which raises questions around below-the-line items and earnings quality/consistency. Overall: historically strong margins, but weakening growth and a sharp earnings disruption in the latest year pressure the score.

Balance Sheet

Leverage improved dramatically in 2025, with debt falling to a very low level (debt-to-equity ~0.01) and equity rising, which meaningfully strengthens balance-sheet resilience. Prior years (2020–2024) showed moderate-to-high leverage (debt-to-equity roughly ~0.87–1.13), so the 2025 deleveraging is a notable positive inflection. A key weakness is that returns on equity drop to 0% in 2025 (driven by zero net income), reducing the benefit of the stronger capital position from a shareholder-return perspective.

Cash Flow

Cash generation is a major pressure point: operating cash flow and free cash flow are negative in 2025 (-$426M) and were also negative in 2024 (-$118M) and 2022 (-$425M), indicating inconsistent cash conversion and funding needs despite reported profitability in several years. While 2023 and 2020 showed positive operating and free cash flow, the recent two-year pattern is decisively weak. The latest period’s cash outflow relative to debt is particularly concerning given the scale of negative operating cash flow.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	547.10M	430.90M	494.12M	239.39M	309.58M
Gross Profit	477.25M	353.75M	426.50M	184.64M	255.13M
EBITDA	365.43M	263.43M	337.67M	102.28M	174.47M
Net Income	339.74M	262.97M	337.48M	102.08M	174.16M
Balance Sheet
Total Assets	4.58B	3.83B	3.42B	3.03B	2.60B
Cash, Cash Equivalents and Short-Term Investments	56.87M	113.12M	98.90M	15.80M	133.12M
Total Debt	2.30B	1.79B	1.56B	1.58B	1.24B
Total Liabilities	2.37B	1.84B	1.61B	1.63B	1.29B
Stockholders Equity	2.22B	1.99B	1.80B	1.40B	1.31B
Cash Flow
Free Cash Flow	-425.80M	-118.79M	67.39M	-424.91M	128.51M
Operating Cash Flow	-425.80M	-118.09M	68.28M	-424.80M	128.62M
Investing Cash Flow	-89.00K	-705.00K	-887.00K	-114.00K	-106.00K
Financing Cash Flow	368.92M	119.20M	22.75M	314.52M	-229.87M

Hercules Capital, Inc. Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 15.43
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• 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 15.43 is below the 20-day moving average (MA) of 15.98, below the 50-day MA of 17.24, and below the 200-day MA of 17.27, indicating a bearish trend. The MACD of -0.71 indicates Positive momentum. The RSI at 39.40 is Neutral, neither overbought nor oversold. The STOCH value of 16.99 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for HTGC.

Hercules Capital, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	68 Neutral	$18.00B	11.42	9.92%	3.81%	9.73%	1.22%
GBDC	63 Neutral	$3.19B	9.74	8.34%	11.70%	24.12%	1.09%
HTGC	62 Neutral	$2.77B	8.13	16.02%	10.00%	-15.32%	-12.29%
PNNT	59 Neutral	$325.17M	12.70	5.38%	16.61%	-3.09%	200.66%
TSLX	59 Neutral	$1.71B	9.99	10.61%	9.64%	-6.44%	-1.18%
FSK	56 Neutral	$3.67B	13.51	0.18%	18.52%	-13.67%	-48.49%
PFLT	55 Neutral	$818.55M	23.67	3.44%	13.64%	36.91%	-48.79%

Hercules Capital, Inc. Corporate Events

Hercules Capital Announces Q4 Cash and Supplemental Distribution

As of February 10, 2026, Hercules Capital’s board declared a fourth-quarter 2025 total cash distribution of $0.47 per share, incorporating the first of four equal installments of a new $0.28 per share supplemental distribution, payable in early March 2026 to holders of record on February 25. The move follows a record 2025 in which the company posted all-time highs in new debt and equity commitments of $3.92 billion, gross fundings of $2.28 billion, total investment income of $532.5 million and net investment income of $341.7 million, while expanding its investment portfolio and maintaining net regulatory leverage below 90%.

In the fourth quarter of 2025, Hercules generated total investment income of $137.4 million and net investment income of $87.0 million, or $0.48 per share, providing 120% coverage of its base cash distribution and supporting continued supplemental payouts. The firm also reported record quarterly gross commitments of $1.06 billion, strong returns on equity and assets, rising net asset value and over $1.0 billion in available liquidity including adviser-managed funds, underscoring its strengthened position in the competitive venture lending market and signaling ongoing capacity to finance high‑growth borrowers while returning capital to shareholders.

The most recent analyst rating on (HTGC) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Hercules Capital stock, see the HTGC Stock Forecast page.

Hercules Capital Completes $300 Million Notes Offering

On February 10, 2026, Hercules Capital, Inc. entered into a Tenth Supplemental Indenture with U.S. Bank Trust Company, National Association, and closed a previously announced public offering of $300 million aggregate principal amount of 5.350% unsecured Notes due February 10, 2029. The notes, issued under a registered shelf on Form N-2, rank senior to expressly subordinated debt, pari passu with other unsubordinated liabilities, and structurally or effectively junior to secured and subsidiary-level obligations, and the company expects to use the net proceeds to fund investments, repay outstanding secured indebtedness, and for general corporate purposes.

The notes bear interest at 5.350% per year, payable semiannually in arrears on February 10 and August 10 starting August 10, 2026, may be redeemed at the company’s option at par plus a make-whole premium if applicable, and are not guaranteed by any subsidiaries. The indenture includes covenants tied to leverage and reporting requirements derived from the Investment Company Act of 1940 and the Exchange Act, and the offering was underwritten pursuant to an agreement dated February 5, 2026 with Goldman Sachs & Co. LLC and SMBC Nikko Securities America, Inc. as representatives of the underwriters.

The most recent analyst rating on (HTGC) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Hercules Capital stock, see the HTGC Stock Forecast page.

Hercules Capital Issues Technical Clarification in Regulatory Filing

Hercules Capital filed a brief regulatory notice stating that information previously disclosed under Item 2.02 of its current report is being incorporated by reference into another section of the same filing. The filing does not provide additional operational, financial, or strategic details and appears to be a technical clarification of how prior disclosures apply within the report, with no explicit implications for the company’s business or stakeholders described.

The most recent analyst rating on (HTGC) stock is a Buy with a $22.00 price target. To see the full list of analyst forecasts on Hercules Capital stock, see the HTGC Stock Forecast page.