Pennantpark $ (PFLT) AI Stock Analysis

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Pennantpark $

(NYSE:PFLT)

67Neutral

PennantPark's strong financial performance, particularly in profitability and balance sheet stability, underpins its overall score. The company's attractive valuation and positive earnings call further support its stock potential. However, the negative cash flow situation and bearish technical indicators present notable risks. While there are strengths in income growth and strategic exits, cash flow inefficiencies and market sentiment require close monitoring.

Positive Factors

Dividend Yield

The dividend equates to an annualized yield of 10.9% on the current stock price.

Financial Performance

Analyst raises the price target to $12.50 from $12 based on strong portfolio growth.

Investment Portfolio

The size of PFLT's investment portfolio increased by 10.6% as very strong originations exceeded heavy payoffs.

Negative Factors

Loan Yields

The investment portfolio increased by 20% due to strong originations, which offset lower loan yields.

Non-recurring Expenses

The company has maintained a stable net asset value despite some non-recurring expenses.

Pennantpark $ (PFLT) vs. S&P 500 (SPY)

Market Cap

$843.50M

Dividend Yield12.56%

Average Volume (3M)1.68M

Price to Earnings (P/E)6.9

Beta (1Y)0.60

Revenue Growth93.63%

EPS Growth24.41%

CountryUS

EmployeesN/A

SectorFinancial

Sector Strength81

IndustryAsset Management

Share Statistics

EPS (TTM)1.39

Shares Outstanding87,955,894

10 Day Avg. Volume1,493,378

30 Day Avg. Volume1,679,610

Financial Highlights & Ratios

PEG Ratio0.28

Price to Book (P/B)N/A

Price to Sales (P/S)6.13

Price to Cash Flow (P/CF)-1.10

P/FCF Ratio0.00

Enterprise Value/Market CapN/A

Enterprise Value/RevenueN/A

Enterprise Value/Gross ProfitN/A

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$11.50

Price Target Upside15.35% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering4

Pennantpark $ Business Overview & Revenue Model

Company DescriptionPennantPark Floating Rate Capital Ltd. (PFLT) is a business development company that primarily invests in U.S. middle-market companies. It focuses on providing customized financing solutions, primarily through direct lending and investing in floating rate loans. The company's investment strategy is aimed at generating both income and capital appreciation for its investors.

How the Company Makes MoneyPennantPark Floating Rate Capital Ltd. (PFLT) generates revenue primarily through the interest income earned from its investment portfolio of floating rate loans. These loans are typically extended to middle-market companies, which are generally defined as companies with earnings before interest, taxes, depreciation, and amortization (EBITDA) between $10 million and $50 million. PFLT aims to maintain a diversified portfolio across various industries to minimize risk. Additionally, the company may earn fee income from structuring and managing these loans. The floating rate nature of the loans provides a hedge against interest rate fluctuations, potentially leading to increased earnings in rising interest rate environments. A significant factor contributing to PFLT's earnings is its strategic partnerships and relationships within the financial sector, which help it source and manage investments effectively.

Pennantpark $ Financial Statement Overview

Summary

PennantPark shows strong profitability with a significant net profit margin and improving balance sheet strength, highlighted by a good equity ratio and strong ROE. However, there are concerns about cash flow sustainability due to negative operating cash flow and negative free cash flow growth.

Income Statement

Positive

The income statement reveals a significant increase in net income over time, with a strong net profit margin of 43.5% for the TTM. Revenue growth is volatile, but current figures show a positive trajectory. EBIT margin is also strong at 19.0%, indicating efficient operations. However, the absence of EBITDA figures limits deeper profitability analysis.

Balance Sheet

Positive

The balance sheet is solid, with a decent equity ratio of 41.1% indicating a stable financial position. The debt-to-equity ratio has improved, showing reduced leverage risk. ROE is strong at 7.2% for the TTM, reflecting good returns for shareholders. However, the high total liabilities relative to assets could be a concern in a downturn.

Cash Flow

Neutral

Cash flow analysis shows a negative operating cash flow, which is concerning for sustainability. The free cash flow growth rate is negative, primarily due to significant cash outflows. The operating cash flow to net income ratio is negative, indicating that the company is not generating cash as efficiently as its net income suggests.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
159.27M	110.28M	139.34M	11.61M	61.91M	22.68M
	Gross Profit
173.63M	110.28M	110.06M	-12.52M	45.00M	548.74K
	EBIT
30.32M	108.82M	106.64M	38.18M	56.92M	18.81M
	EBITDA
0.00	0.00	-28.23M	0.00	0.00	0.00
	Net Income Common Stockholders
97.70M	91.84M	39.26M	3.45M	56.52M	18.41M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
4.66M	112.05M	99.99M	47.88M	49.83M	57.51M
	Total Assets
142.84M	2.11B	1.18B	1.22B	1.17B	1.15B
	Total Debt
2.16M	183.83M	495.43M	672.78M	652.63M	653.21M
	Net Debt
-2.50M	-112.05M	394.88M	624.90M	602.81M	595.70M
	Total Liabilities
49.10M	1.23B	526.01M	696.77M	680.25M	671.02M
	Stockholders Equity
93.74M	877.29M	653.61M	527.09M	490.61M	477.27M
Cash Flow		Free Cash Flow
-658.74M	-801.38M	140.56M	-49.96M	49.57M	-4.94M
	Operating Cash Flow
-658.74M	-801.38M	140.56M	-49.96M	49.57M	-4.94M
	Investing Cash Flow
-193.39M	0.00	0.00	-112.57M	41.02B	-39.84B
	Financing Cash Flow
878.59M	812.87M	-91.53M	47.70M	-56.31M	-909.16K

Pennantpark $ Technical Analysis

Technical Analysis Sentiment

Negative

Last Price9.97

Price Trends

50DMA

10.59

Negative

100DMA

10.61

Negative

200DMA

10.60

Negative

Market Momentum

MACD

-0.30

Negative

RSI

47.34

Neutral

STOCH

81.70

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFLT, the sentiment is Negative. The current price of 9.97 is below the 20-day moving average (MA) of 10.02, below the 50-day MA of 10.59, and below the 200-day MA of 10.60, indicating a bearish trend. The MACD of -0.30 indicates Negative momentum. The RSI at 47.34 is Neutral, neither overbought nor oversold. The STOCH value of 81.70 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for PFLT.

Pennantpark $ Risk Analysis

Pennantpark $ disclosed 98 risk factors in its most recent earnings report. Pennantpark $ reported the most risks in the “Finance & Corporate” category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Pennantpark $ Peers Comparison

Overall Rating

UnderperformOutperform

Sector (63)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TRIN	78 Outperform	$924.25M	7.00	16.12%	14.05%	48.54%	6.64%
SLRC	71 Outperform	$855.96M	8.94	9.67%	10.55%	14.33%	25.35%
PFLT	67 Neutral	$843.50M	6.89	12.06%	12.56%	93.63%	24.41%
CGBD	67 Neutral	$1.04B	9.02	9.77%	12.95%	-11.85%	-3.73%
BCSF	66 Neutral	$961.35M	8.01	10.49%	11.17%	12.24%	-3.21%
NMFC	65 Neutral	$1.05B	9.47	8.49%	12.94%	-3.55%	-20.43%
Sector *	63 Neutral	$12.33B	9.59	8.02%	79.26%	12.87%	-4.61%

* Financial Sector Average

Performance Comparison

PFLT

Pennantpark $

9.97

-0.25

-2.45%

NMFC

New Mountain Finance

10.12

-1.12

-9.96%

SLRC

SLR Investment Corp.

15.69

1.89

13.70%

CGBD

TCG BDC

14.59

-0.58

-3.82%

BCSF

Bain Capital Specialty Finance

15.44

0.76

5.18%

TRIN

Trinity Capital

14.71

1.79

13.85%

Pennantpark $ Earnings Call Summary

Earnings Call Date: Feb 10, 2025 | % Change Since: -7.17% | Next Earnings Date: May 12, 2025

Earnings Call Sentiment Positive

The earnings call was largely positive with significant growth in the portfolio, successful exits, and robust credit quality. However, concerns were noted regarding some unrealized losses and markdowns in equity investments.

Highlights

Portfolio Growth

The portfolio grew to $2.2 billion, an 11% increase from the prior quarter, with $607 million invested in new and existing investments at a weighted average yield of 10.3%.

Successful Investment Exit

Completed the successful exit of Marketplace Events, generating a 2.6 times multiple on invested capital and a 19% annualized return over four years.

Joint Venture Expansion

PFLT and JV partner committed an additional $100 million to the JV, expected to grow the JV portfolio to approximately $1.5 billion of assets.

Strong Credit Quality

Non-accruals represent only 0.4% of the portfolio at cost and 0.1% at market value.

New Financing Pricing

Priced a new $361 million term debt securitization transaction with a weighted average spread of 1.59%, a decrease of thirty basis points from previous financing.

Lowlights

Net Realized and Unrealized Loss

Net realized and unrealized change on investments, including provision for taxes, was a loss of $1.6 million for the quarter.

Equity Investment Valuation

Equity investment in the PSSL is valued at less than 50% of cost, persisting as a markdown quarter after quarter.

Company Guidance

During PennantPark Floating Rate Capital's first fiscal quarter 2025 earnings call, guidance highlighted several key metrics and strategic insights. The company reported a GAAP net investment income of $0.37 per share and a core net investment income of $0.33 per share for the quarter ended December 31st, 2024. Their portfolio grew by 11% to $2.2 billion, with investments totaling $607 million at a weighted average yield of 10.3%. The debt to equity ratio was 1.4 times, nearing their target of 1.5 times. They successfully exited their investment in Marketplace Events, achieving a 2.6 times multiple on invested capital and a 19% annualized return. Their first lien senior secured debt portfolio, with a debt to EBITDA ratio of 4.3 times and interest coverage of 2.2 times, remains conservatively structured. The call also emphasized the robustness of the PSS joint venture, with a portfolio of $1.1 billion, and the strategic importance of their securitization financing, which stands at a $361 million term debt with a weighted average spread of 1.59%. The company remains focused on capital preservation and generating stable income through strategic investments in the core middle market.

Pennantpark $ Corporate Events

Private Placements and FinancingBusiness Operations and Strategy

Pennantpark Amends Credit Facility for Better Terms

Positive

Apr 22, 2025

On April 16, 2025, PennantPark Floating Rate Funding I, LLC, a subsidiary of PennantPark Floating Rate Capital Ltd., amended its credit facility agreement, reducing the interest rate spread, extending the reinvestment and maturity periods by one year, and adjusting the maximum first lien advance rate and lender commitments. This amendment, announced on April 22, 2025, reflects favorable terms in the current market, potentially benefiting investors and enhancing the company’s financial flexibility.

Spark’s Take on PFLT Stock

According to Spark, TipRanks’ AI Analyst, PFLT is a Neutral.

PennantPark Floating Rate Capital shows strong profitability and valuation metrics, indicating potential for income generation. However, technical analysis points to a bearish trend with stock trading below key averages. While the earnings call highlighted positive growth, cash flow concerns and unrealized losses present risks. Overall, the stock is moderately attractive with a need for close monitoring of cash flow improvements.

To see Spark’s full report on PFLT stock, click here.

Executive/Board ChangesRegulatory Filings and Compliance

PennantPark Appoints New Chief Compliance Officer

Neutral

Apr 17, 2025

On April 15, 2025, Frank Galea resigned as Chief Compliance Officer of PennantPark Floating Rate Capital Ltd. with no disagreements reported regarding company operations, policies, or practices. Gerald Cummins, a seasoned professional with a background at ACA Group and Alaric Compliance Services, has been appointed as his successor, indicating a smooth transition in the company’s compliance leadership.

Spark’s Take on PFLT Stock

According to Spark, TipRanks’ AI Analyst, PFLT is a Outperform.

PennantPark’s stock is moderately attractive with strong profitability and a solid balance sheet but requires careful management of cash flow issues. The valuation is compelling due to a low P/E ratio and high dividend yield. The positive earnings call further supports a favorable view, although technical indicators suggest caution.

To see Spark’s full report on PFLT stock, click here.

Financial Disclosures

PennantPark to Announce Q2 2025 Financial Results

Neutral

Apr 3, 2025

On April 3, 2025, PennantPark Floating Rate Capital Ltd. announced it will release its financial results for the second fiscal quarter ended March 31, 2025, on May 12, 2025, after market close. The company will host a conference call on May 13, 2025, to discuss these results, providing stakeholders an opportunity to gain insights into its financial performance and strategic direction.

DividendsBusiness Operations and Strategy

PennantPark Announces April 2025 Monthly Distribution

Positive

Apr 2, 2025

On April 2, 2025, PennantPark Floating Rate Capital Ltd. announced a monthly distribution of $0.1025 per share for April 2025, payable on May 1, 2025, to stockholders of record as of April 15, 2025. The distribution is expected to be paid from taxable net investment income, with specific tax characteristics reported to stockholders on Form 1099 after the calendar year ends. This announcement underscores the company’s ongoing commitment to providing returns to its investors and highlights its strategic focus on generating qualified interest income and short-term capital gains, potentially benefiting non-U.S. stockholders with tax exemptions.

Dividends

PennantPark Announces March 2025 Distribution

Neutral

Mar 4, 2025

On March 4, 2025, PennantPark Floating Rate Capital Ltd. announced a monthly distribution of $0.1025 per share, payable on April 1, 2025, to stockholders of record as of March 14, 2025. This distribution is expected to be paid from taxable net investment income, and the tax characteristics will be reported to stockholders after the calendar year ends. The company operates as a regulated investment company, allowing certain distributions to be exempt from U.S. withholding tax for non-U.S. stockholders, potentially impacting its appeal to international investors.

Dividends

PennantPark Announces February 2025 Distribution Details

Positive

Feb 5, 2025

PennantPark Floating Rate Capital Ltd. announced its monthly distribution of $0.1025 per share for February 2025, which will be payable on March 3, 2025, to stockholders of record as of February 18, 2025. The distribution, expected to be paid from taxable net investment income, may include qualified interest income and short-term capital gains exempt from U.S. withholding tax for non-U.S. stockholders. This announcement highlights PennantPark’s ongoing commitment to providing consistent returns to its investors while navigating the complexities of tax regulations for non-U.S. stakeholders.

Glossary

OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.

NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.

UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.