Pennantpark Investment (PNNT) AI Stock Analysis

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Pennantpark Investment

(NYSE:PNNT)

48Neutral

PennantPark Investment's overall stock score reflects significant concerns due to mixed financial performance marked by high leverage and inconsistent cash flows. The technical indicators suggest a bearish trend, while the valuation highlights possible overvaluation despite a high dividend yield. The earnings call presents both growth opportunities and substantial challenges, particularly with income not covering dividends and high nonaccruals. These elements collectively lead to a cautious outlook on the stock.

Pennantpark Investment (PNNT) vs. S&P 500 (SPY)

Market Cap

$426.38M

Dividend Yield14.39%

Average Volume (3M)573.35K

Price to Earnings (P/E)26.2

Beta (1Y)0.52

Revenue GrowthN/A

EPS Growth-66.59%

CountryUS

EmployeesN/A

SectorFinancial

Sector Strength88

IndustryAsset Management

Share Statistics

EPS (TTM)0.25

Shares Outstanding65,296,100

10 Day Avg. Volume386,663

30 Day Avg. Volume573,348

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)0.00

Price to Cash Flow (P/CF)0.00

P/FCF Ratio0.00

Enterprise Value/Market Cap2.76

Enterprise Value/RevenueN/A

Enterprise Value/Gross Profit14.90

Enterprise Value/EbitdaN/A

Forecast

1Y Price Target

$6.63

Price Target Upside1.53% Upside

Rating ConsensusHold

Number of Analyst Covering4

Pennantpark Investment Business Overview & Revenue Model

Company DescriptionPennantPark Investment Corporation, a business development company is a private equity fund specializes in direct and mezzanine investments in middle market companies. It invests in the form of mezzanine debt, senior secured loans, and equity investments. The fund typically invests in buildings and real estate, hotels, gaming and leisure, technology, telecommunications, transportation, information technology services, electronics, healthcare & pharmaceuticals, education and childcare, financial services, printing and publishing, consumer products, business services, energy & Related Services and utilities, distribution, oil and gas, media, environmental services, aerospace and defense, building materials, capital equipment, chemicals, plastics, & rubber, food & beverage, wholesale, manufacturing and basic industries and retail. It invests in equity securities and debt transactions through preferred stock, common stock, warrants, options, senior secured debt, subordinated debt, subordinated loans, first lien debt, mezzanine loans, and distressed debt securities and private equity co-investments. It seeks to invest in companies based in the United States. The fund seeks to invest between $10 million and $100 million cross the capital structure (senior secured loans, subordinated debt, and other investments) in its portfolio companies with EBITDA between $10 to $50 million. Its mezzanine loans, senior secured loans, and other investments in its portfolio companies are between $15 million and $50 million. The fund may also make non-control equity and debt investments.

How the Company Makes MoneyPennantPark Investment Corporation makes money primarily through the interest and dividend income generated from its investment portfolio, which consists of debt and equity investments in middle-market companies. The company earns interest income from its debt investments, which typically include senior secured loans, mezzanine loans, and other credit instruments. Additionally, PennantPark may realize capital gains from the sale of equity investments. The firm also benefits from management fees and incentive fees through its role in managing investment funds and partnerships. Key factors contributing to its earnings include the performance of its portfolio companies, interest rate environments, and overall economic conditions.

Pennantpark Investment Financial Statement Overview

Summary

Pennantpark Investment exhibits a mixed financial position characterized by inconsistent income and cash flow performance and high leverage, posing potential risks. While there are some positive elements, such as improved TTM net income, overall stability and growth remain concerns.

Income Statement

Neutral

The income statement shows mixed performance with a positive TTM net income but a negative EBIT indicating challenges in operational efficiency. Revenue growth is inconsistent with significant fluctuations year-over-year.

Balance Sheet

Negative

The balance sheet reflects high leverage with a substantial debt-to-equity ratio, indicating potential financial risk. Equity has decreased over the period, impacting the company's stability.

Cash Flow

Neutral

Cash flow statements reveal volatility, with inconsistent operating cash flow trends. The operating cash flow to net income ratio shows potential issues in cash generation relative to profitability.

Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
115.25M	145.37M	104.97M	171.31M	100.22M
	Gross Profit
79.09M	145.37M	-9.92M	151.63M	-19.72M
	EBIT
111.47M	109.24M	11.90M	167.22M	-14.77M
	EBITDA
0.00	0.00	0.00	-18.53M	152.95M
	Net Income Common Stockholders
48.85M	-33.81M	-24.74M	166.62M	-15.97M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
49.86M	38.77M	52.67M	20.36M	25.81M
	Total Assets
1.39B	1.16B	1.32B	1.30B	1.11B
	Total Debt
148.57M	516.84M	704.51M	607.34M	568.31M
	Net Debt
-49.86M	478.06M	651.85M	586.98M	542.51M
	Total Liabilities
895.18M	654.79M	732.95M	634.95M	588.64M
	Stockholders Equity
493.91M	502.19M	585.57M	660.14M	525.71M
Cash Flow		Free Cash Flow
-172.40M	222.94M	-19.40M	7.91M	-129.60M
	Operating Cash Flow
-172.40M	222.94M	-19.40M	7.91M	-129.60M
	Investing Cash Flow
0.00	0.00	-22.14M	-6.89B	-156.61B
	Financing Cash Flow
183.43M	-239.16M	52.04M	-13.42M	95.78M

Pennantpark Investment Technical Analysis

Technical Analysis Sentiment

Neutral

Last Price6.53

Price Trends

50DMA

6.70

Negative

100DMA

6.73

Negative

200DMA

6.57

Negative

Market Momentum

MACD

-0.05

Negative

RSI

51.11

Neutral

STOCH

78.96

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For PNNT, the sentiment is Neutral. The current price of 6.53 is above the 20-day moving average (MA) of 6.30, below the 50-day MA of 6.70, and below the 200-day MA of 6.57, indicating a neutral trend. The MACD of -0.05 indicates Negative momentum. The RSI at 51.11 is Neutral, neither overbought nor oversold. The STOCH value of 78.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for PNNT.

Pennantpark Investment Risk Analysis

Pennantpark Investment disclosed 85 risk factors in its most recent earnings report. Pennantpark Investment 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 Investment Peers Comparison

Overall Rating

UnderperformOutperform

Sector (64)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GAIN	71 Outperform	$515.35M	7.30	14.74%	6.86%	-8.68%	-3.76%
GLAD	68 Neutral	$567.18M	5.52	22.43%	7.95%	69.53%	60.29%
SAR	68 Neutral	$357.37M	10.03	9.28%	11.88%	-24.05%	28.25%
SCM	64 Neutral	$369.13M	7.25	13.29%	12.31%	17.67%	128.48%
Sector *	64 Neutral	$12.64B	9.74	8.05%	17044.60%	12.66%	-4.62%
CION	58 Neutral	$527.09M	15.71	3.99%	14.49%	2.30%	-63.97%
PNNT	48 Neutral	$426.38M	26.15	3.28%	14.39%	―	-66.59%

* Financial Sector Average

Performance Comparison

PNNT

Pennantpark Investment

6.53

0.27

4.31%

GLAD

Gladstone Capital

25.40

5.62

28.41%

GAIN

Gladstone Investment

13.99

1.27

9.98%

SAR

Saratoga Investment

24.91

4.22

20.40%

SCM

Stellus Capital

12.99

0.42

3.34%

CION

CION Investment Corp

9.94

-0.22

-2.17%

Pennantpark Investment Earnings Call Summary

Earnings Call Date:Feb 10, 2025

(Q1-2025)

% Change Since: -5.91%|

Next Earnings Date:May 12, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong investment opportunities and portfolio growth, particularly in the joint venture segment. However, challenges remain with net investment income not covering dividends, high nonaccruals, and slow equity rotation. Despite the positive aspects, these issues present significant concerns.

Q1-2025 Updates

Positive Updates

Attractive Investment Opportunities and Portfolio Growth

During the quarter, $296 million was invested in 12 new and 61 existing portfolio companies at a weighted average yield of 10.6%. The portfolio's weighted average leverage ratio was 4.9x, with an interest coverage of 1.9x.

Strong Performance of Joint Venture (JV) Portfolio

The JV portfolio grew to $1.3 billion, with an 18.4% return on invested capital over the last 12 months. The JV has the capacity to increase its portfolio to $1.6 billion.

Positive Financial Metrics

GAAP and adjusted NAV increased by 0.1% to $7.57 per share from $7.56. The weighted average yield on debt investments was 12%.

Low Loss Ratio on Investments

Since inception, PNNT has invested $8.6 billion at an average yield of 11.3% with a loss ratio on invested capital of approximately 20 basis points annually.

Negative Updates

Net Investment Income Below Dividend

GAAP and core net investment income was $0.20 per share, which is $0.04 below the quarterly dividend.

High Percentage of Nonaccruals

Two nonaccruals represented 4.3% of the portfolio at cost and 1.5% at market value.

Equity Rotation Challenges

Efforts to reduce equity investment exposure have been slower than desired, aiming to cut the 20% equity exposure in half over time.

Company Guidance

During PennantPark Investment Corporation's first fiscal quarter of 2025 earnings call, key metrics were disclosed in relation to the company's financial performance and portfolio management. For the quarter ending December 31, the GAAP and core net investment income stood at $0.20 per share, slightly below the $0.24 quarterly dividend. Despite this, the company has $65 million or $0.99 per share of undistributed spillover income. The portfolio was valued at $1.3 billion, with $296 million invested in 12 new and 61 existing companies at a weighted average yield of 10.6%. The portfolio's weighted average debt-to-EBITDA ratio was 4x, with a weighted average interest coverage of 2.2x. Additionally, the JV portfolio grew to $1.3 billion, and investments in the JV yielded an 18.4% return on invested capital. The company reported two nonaccruals, representing 4.3% of the portfolio at cost and 1.5% at market value. These metrics reflect PennantPark's commitment to strategic investment and capital preservation in the core middle market.

Pennantpark Investment Corporate Events

Dividends

PennantPark Announces May 2025 Monthly Distribution

Positive

May 2, 2025

On May 2, 2025, PennantPark Investment Corporation announced a monthly distribution of $0.08 per share for May 2025, payable on June 2, 2025, to stockholders of record as of May 15, 2025. This distribution is expected to be paid from taxable net investment income, and its tax characteristics will be reported to stockholders after the end of the calendar year. This announcement reflects the company’s ongoing commitment to providing returns to its investors and maintaining its position in the middle-market investment sector.

Spark’s Take on PNNT Stock

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

PennantPark Investment’s stock is facing challenges primarily due to its mixed financial performance and bearish technical indicators. High leverage and inconsistent cash flow raise concerns about financial stability. Despite attractive dividend yields, the stock’s high P/E ratio suggests it may be overvalued. The recent earnings call revealed both opportunities and challenges, underscoring the need for caution.

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

Executive/Board Changes

PennantPark Investment Appoints New Chief Compliance Officer

Neutral

Apr 17, 2025

On April 15, 2025, Frank Galea resigned as Chief Compliance Officer of PennantPark Investment Corporation, with no disagreements reported regarding company operations or policies. Gerald Cummins, a seasoned professional with experience at ACA Group and Alaric Compliance Services, LLC, was appointed as the new Chief Compliance Officer, marking a seamless leadership transition.

Spark’s Take on PNNT Stock

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

PennantPark Investment’s overall score is driven by its mixed financial performance with high leverage and cash flow concerns. Technical indicators suggest a bearish trend, while valuation metrics present a high P/E ratio but substantial dividend yield. The earnings call highlighted growth in JV investments but also raised concerns about income sustainability and nonaccruals.

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

Financial Disclosures

PennantPark Investment to Announce Q2 2025 Results

Neutral

Apr 3, 2025

On April 3, 2025, PennantPark Investment Corporation announced its plan to 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, indicating its commitment to transparency and stakeholder engagement. This announcement may impact stakeholders by providing insights into the company’s financial health and operational performance.

Dividends

PennantPark Investment Announces April 2025 Distribution

Positive

Apr 2, 2025

On April 2, 2025, PennantPark Investment Corporation announced a monthly distribution of $0.08 per share for April 2025, payable on May 1, 2025, to stockholders of record as of April 15, 2025. This distribution is expected to be paid from taxable net investment income, with final tax characteristics reported on Form 1099 after the year-end. This announcement reflects the company’s ongoing commitment to providing returns to its shareholders through regular distributions.

Dividends

PennantPark Investment Declares March 2025 Distribution

Positive

Mar 4, 2025

On March 4, 2025, PennantPark Investment Corporation announced a monthly distribution of $0.08 per share for March 2025, 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 its final tax characteristics will be reported to stockholders after the end of the calendar year. This announcement reflects the company’s ongoing commitment to providing returns to its investors and maintaining its position in the middle-market investment sector.

DividendsBusiness Operations and Strategy

PennantPark Announces February 2025 Monthly Distribution

Positive

Feb 5, 2025

On February 5, 2025, PennantPark Investment Corporation announced a monthly distribution of $0.08 per share for February 2025, payable on March 3, 2025, to stockholders of record as of February 18, 2025. This distribution is expected to be paid from taxable net investment income, and its final tax characteristics will be reported after the end of the calendar year. This announcement reflects the company’s ongoing financial strategies and can impact stakeholders by providing consistent returns, showcasing its commitment to maintaining reliable investment income distribution.

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.