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Pennantpark Floating Rate Capit (PFLT)
:PFLT
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Pennantpark $
(NYSE:PFLT)
74Outperform
Positive Factors
Credit Quality
PFLT has an admirable long-term credit quality record, with annual losses of only 0.10% of loans since 2011.
Dividend Yield
The dividend yield is attractive at 11.1%, with the stock price expected to appreciate, resulting in a potential total return of about 20%.
Portfolio Growth
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
$992.14M
Dividend Yield10.9%
Average Volume (3M)1.37M
Price to Earnings (P/E)8.1
Beta (1Y)0.61
Revenue Growth93.63%
EPS Growth24.41%
CountryUS
EmployeesN/A
SectorFinancial
Sector Strength82
IndustryAsset Management
Share Statistics
EPS (TTM)1.39
Shares Outstanding87,955,894
10 Day Avg. Volume1,196,527
30 Day Avg. Volume1,367,024
Financial Highlights & Ratios
PEG Ratio0.33
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
$12.00Price Target Upside7.24% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering3
Pennantpark $ Business Overview & Revenue Model
Company DescriptionPennantPark Floating Rate Capital Ltd. is a business development company. It seeks to make secondary direct, debt, equity, and loan investments. The fund seeks to invest through floating rate loans in private or thinly traded or small market-cap, public middle market companies. It primarily invests in the United States and to a limited extent non-U.S. companies. The fund typically invests between $2 million and $20 million. The fund also invests in equity securities, such as preferred stock, common stock, warrants or options received in connection with debt investments or through direct investments. It primarily invests between $10 million and $50 million in investments in senior secured loans and mezzanine debt. It seeks to invest in companies not rated by national rating agencies. The companies if rated would be between BB and CCC under the Standard & Poor's system. The fund invests 30% is invested in non-qualifying assets like investments in public companies whose securities are not thinly traded or do not have a market capitalization of less than $250 million, securities of middle-market companies located outside of the United States, high-yield bonds, distressed debt, private equity, securities of public companies that are not thinly traded, and investment companies as defined in the 1940 Act. Under normal conditions, the fund expects atleast 80 percent of its net assets plus any borrowings for investment purposes to be invested in Floating Rate Loans and investments with similar economic characteristics, including cash equivalents invested in money market funds. It expects to represent 65 percent of its portfolio through senior secured loans. In case of floating rate loans, it holds investments for a period of three to ten years.
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
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.78
Positive
Balance Sheet
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.70
Positive
Cash Flow
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.60
Neutral
| Breakdown | |||||
| TTM | Sep 2024 | Sep 2023 | Sep 2022 | Sep 2021 | Sep 2020 |
|---|---|---|---|---|---|
| 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
Positive
11.19
Price Trends
11.06
Positive
10.85
Positive
10.76
Positive
Market Momentum
0.08
Negative
52.70
Neutral
59.54
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PFLT, the sentiment is Positive. The current price of 11.19 is above the 20-day moving average (MA) of 11.11, above the 50-day MA of 11.06, and above the 200-day MA of 10.76, indicating a bullish trend. The MACD of 0.08 indicates Negative momentum. The RSI at 52.70 is Neutral, neither overbought nor oversold. The STOCH value of 59.54 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 |
|---|---|---|---|---|---|---|---|
76 Outperform | $15.13B | 9.06 | 12.40% | 8.68% | 19.95% | -10.57% | |
74 Outperform | $992.14M | 8.10 | 12.06% | 10.90% | 93.63% | 24.41% | |
74 Outperform | $5.02B | 9.68 | 19.26% | 5.24% | 51.80% | 12.05% | |
72 Outperform | $1.42B | 22.09 | 3.96% | 14.86% | -28.04% | -69.52% | |
63 Neutral | $14.20B | 10.11 | 9.01% | 4.34% | 16.34% | -11.27% | |
63 Neutral | $714.08M | 8.56 | 12.58% | 8.37% | 2.31% | -15.06% | |
58 Neutral | $679.77M | ― | -8.57% | 17.02% | 8.24% | -207.60% |
* Financial Sector Average
Performance Comparison
PFLT
Pennantpark $
11.19
1.15
11.45%
FDUS
Fidus Investment
20.39
2.89
16.51%
MAIN
Main Street Capital
56.56
13.20
30.44%
ARCC
Ares Capital
22.16
3.54
19.01%
TCPC
BlackRock TCP Capital
8.01
-0.71
-8.14%
GSBD
Goldman Sachs BDC
11.63
-1.44
-11.02%
Pennantpark $ Earnings Call Summary
Earnings Call Date: Feb 10, 2025 | % Change Since: 3.04% | Next Earnings Date: May 7, 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
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.
Financial Disclosures
PennantPark to Announce Q1 2025 Financial Results
Neutral
Jan 8, 2025
PennantPark Floating Rate Capital Ltd. announced it will release its first fiscal quarter 2025 results on February 10, 2025, with a conference call scheduled for February 11 to discuss the financial outcomes. The announcement is significant for stakeholders as it provides insight into the company’s performance and future prospects, impacting its market positioning and investor confidence.
Dividends
PennantPark Announces January 2025 Shareholder Distribution
Positive
Jan 3, 2025
PennantPark Floating Rate Capital Ltd. announced a monthly distribution of $0.1025 per share for January 2025, payable on February 3, 2025, with the distribution expected to be derived from taxable net investment income. As a regulated investment company, it can distribute qualified interest income and short-term capital gains to non-U.S. stockholders without U.S. withholding tax, contingent on proper documentation. The announcement reflects PennantPark’s ongoing commitment to providing returns to its shareholders while leveraging its regulatory status for favorable tax treatment.
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.