Weekly Investment Analysts’ Ratings Updates for Triangle Capital Corporation (TCAP)

A number of firms have modified their ratings and price targets on shares of Triangle Capital Corporation (NYSE: TCAP) recently:

  • 11/6/2017 – Triangle Capital Corporation had its price target lowered by analysts at National Securities from $16.00 to $11.00. They now have a “neutral” rating on the stock. They wrote, “• Triangle‘s NAV/share decreased by 10.9% Q/Q to $13.20 from $14.83, an astonishing drop that drove an annualized economic loss of 31.6% for 3Q17. We thought we were being conservative on 10/24/17 when, in the earnings preview, we forecasted NAV would close 9/30/17 at $14.21 and 2017 at $13.56 but it appears that we were overly optimistic in these assumptions.

    • We also underestimated the dividend cut although it was refreshing to have the band aid pulled off. We had anticipated a reduction in the quarterly dividend to $0.36/share in 1Q18 but TCAP cut the dividend all the way to $0.30/share for 4Q17.

    • There has been nothing short of a remarkable amount of “TCAP 1.0” (2014-2015 vintages) that have gone very bad very fast and we cannot help but expect many other pairs of shoes to drop given the current trajectory of asset quality. Additionally, as we have pointed out, the marks tend to get continually much more negative when an asset is placed on non-accrual status and we thus expect realized losses to outstrip reversals of unrealized depreciation and cause net losses to drive further NAV reductions.

    • TCAP has enough headwinds in terms of the drag on earnings from troubled credits pulling down the overall portfolio yield, but as the company does more first lien and unitranche loans this will doubly pressure yield and any further uptick in credit quality could even put the $0.30/share quarterly dividend in jeopardy.

    • While the company discussed the potential of strategic alternatives, such as joint venture (JV), merger, sale of loans, etc. we don’t think many of these are likely as any company capable of acquiring the company would likely not want to muddy up their balance sheet. Any assets the company is looking to sell would likely be those that could only be sold at a loss, and while a JV would work nicely for the unitranche book it would be too little too late, in our opinion.

    • We are revising our 2017 NII/share estimate to $1.49 from $1.65 and our 2018 NII/share estimate to $1.27 from $1.60.”
  • 11/3/2017 – Triangle Capital Corporation was downgraded by analysts at Stephens from an “overweight” rating to an “equal weight” rating.
  • 11/3/2017 – Triangle Capital Corporation had its price target lowered by analysts at Robert W. Baird from $16.00 to $12.00. They now have an “outperform” rating on the stock.
  • 11/2/2017 – Triangle Capital Corporation was downgraded by analysts at Bank of America Corporation from a “buy” rating to an “underperform” rating.
  • 10/24/2017 – Triangle Capital Corporation had its price target lowered by analysts at National Securities from $18.00 to $16.00. They now have a “neutral” rating on the stock. They wrote, “• Triangle has been plagued by credit issues the past year and a half, with non-accruals at cost finishing the most recent quarter at $94.1 million or 7.5% of the portfolio. On 10/3/17, GST Autoleather, a portfolio company of Triangle, announced it filed to reorganize under Chapter 11. As of 6/30/17, the investment had an amortized cost of $23.1 million or 1.8% of the portfolio. We expect the fair value to be written down to $2.3 million as of 9/30/17 from $19.3 million in 2Q17 before we model TCAP realizing a loss on the position in 4Q17.

    • Previous PIK non-accruals such as Women’s Marketing and Community Intervention were eventually placed on full cash non-accrual and written down significantly more. We expect that this will be the norm, not exception, and as a result we expect the current PIK non-accruals of Café Enterprises and Eckler’s Holdings to both go on cash non-accrual and to be marked down further.

    • In total, we model NAV/share sliding to $14.21 and $13.56 in 3Q17 and 4Q17, respectively, from $14.83 as of 6/30/17. We expect TCAP to eke out a 0.4% economic return for 2017 before we model it to improve to 13.6% for 2018 on the back of what we expect will be improved asset quality.

    • We are revising our 2017 NII/share estimate to $1.65 from $1.68 and our 2018 NII/share estimate to $1.60 from $1.77.”
  • 10/20/2017 – Triangle Capital Corporation was downgraded by analysts at Zacks Investment Research from a “hold” rating to a “sell” rating. According to Zacks, “TRIANGLE CAPITAL CORPORATION is a specialty finance company organized to provide customized financing solutions to lower middle market companies located throughout the United States. Triangle’s investment objective is to seek attractive returns by generating current income from debt investments and capital appreciation from equity related investments. Triangle’s investment philosophy is to partner with business owners, management teams and financial sponsors to provide flexible financing solutions to fund growth, changes of control, or other corporate events. “
  • 10/18/2017 – Triangle Capital Corporation was upgraded by analysts at Hilliard Lyons from a “neutral” rating to a “buy” rating. They now have a $14.00 price target on the stock.
  • 10/17/2017 – Triangle Capital Corporation had its “underperform” rating reaffirmed by analysts at Raymond James Financial, Inc..
  • 10/11/2017 – Triangle Capital Corporation was upgraded by analysts at Zacks Investment Research from a “sell” rating to a “hold” rating. According to Zacks, “TRIANGLE CAPITAL CORPORATION is a specialty finance company organized to provide customized financing solutions to lower middle market companies located throughout the United States. Triangle’s investment objective is to seek attractive returns by generating current income from debt investments and capital appreciation from equity related investments. Triangle’s investment philosophy is to partner with business owners, management teams and financial sponsors to provide flexible financing solutions to fund growth, changes of control, or other corporate events. “
  • 10/5/2017 – Triangle Capital Corporation was given a new $18.00 price target on by analysts at Keefe, Bruyette & Woods. They now have a “hold” rating on the stock.
  • 10/2/2017 – Triangle Capital Corporation was upgraded by analysts at ValuEngine from a “hold” rating to a “buy” rating.

Shares of Triangle Capital Corporation (NYSE:TCAP) traded down $0.16 on Tuesday, hitting $9.42. The company had a trading volume of 479,900 shares, compared to its average volume of 369,955. The company has a debt-to-equity ratio of 0.87, a current ratio of 56.98 and a quick ratio of 56.98. Triangle Capital Corporation has a 52-week low of $8.91 and a 52-week high of $20.35. The stock has a market capitalization of $449.72, a PE ratio of 5.95, a price-to-earnings-growth ratio of 1.23 and a beta of 0.91.

Triangle Capital Corporation (NYSE:TCAP) last released its quarterly earnings data on Wednesday, November 1st. The credit services provider reported $0.36 earnings per share for the quarter, missing the Zacks’ consensus estimate of $0.41 by ($0.05). The company had revenue of $29.88 million for the quarter, compared to analyst estimates of $32.84 million. Triangle Capital Corporation had a positive return on equity of 10.67% and a negative net margin of 36.80%. The business’s quarterly revenue was up 9.0% on a year-over-year basis. During the same period last year, the firm posted $0.41 EPS. sell-side analysts predict that Triangle Capital Corporation will post 1.56 EPS for the current year.

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The business also recently disclosed a quarterly dividend, which will be paid on Wednesday, December 20th. Shareholders of record on Wednesday, December 6th will be paid a dividend of $0.30 per share. This represents a $1.20 dividend on an annualized basis and a yield of 12.74%. The ex-dividend date is Tuesday, December 5th. Triangle Capital Corporation’s dividend payout ratio (DPR) is currently -200.00%.

Triangle Capital Corporation is an internally managed, non-diversified closed-end management investment company. The Company is a specialty finance company that provides customized financing to lower middle market companies located primarily in the United States. The Company’s investment objective is to seek attractive returns by generating current income from its debt investments and capital appreciation from its equity-related investments.

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