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Main Street Capital Corporation’s MAIN third-quarter 2024 adjusted net investment income of $1 per share missed the Zacks Consensus Estimate of $1.02. The reported figure compares favorably to 99 cents per share reported in the year-ago quarter.

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The results were primarily affected by an increase in expenses. Nonetheless, an improvement in the total investment income and the company’s robust portfolio activities supported the results to some extent.

Distributable net investment income (GAAP basis) was $93 million, up 7.9% from the prior-year quarter.

MAIN’s Total Investment Income Improves, Expenses Rise

Total investment income was $136.8 million, up 11% year over year. The rise was largely driven by an increase in interest income, dividend income and fee income. However, the top line missed the Zacks Consensus Estimate of $137.6 million.

Total expenses were $49.2 million, up 19.9% year over year. The increase was due to a rise in all the components of expenses.

Robust Portfolio Activities for Main Street Capital

In the third quarter, the company invested a total of $51.6 million in its lower middle market (LMM) portfolio. Of this amount, $11.2 million was invested in new portfolio companies. In comparison, the total LMM portfolio investment in the year-ago quarter was $19.6 million.

Main Street Capital completed $309.3 million in total private loan portfolio investments, up significantly from $134.6 million in the prior year quarter.

Net decrease in the total cost basis of the middle market investment portfolio was $4.3 million, down 60.6% year over year.

Main Street Capital’s Balance Sheet Position

As of Sept. 30, 2024, the company’s cash and cash equivalents totaled $84.4 million, which increased significantly from $30.5 million as of June 30, 2024.

The company has an aggregate unused capacity of $1.25 billion under its corporate revolving credit facility, up 36.6% from the prior quarter.

As of Sept. 30, 2024, total Assets were $5.1 billion, up 2.8% from the previous quarter.

Net asset value was $30.57 per share, up from $29.8 as of June 30, 2024.

Our Take on MAIN

The growth in total investment income is expected to persist in the coming quarters, driven by increased demand for customized financing. Higher investment commitments are anticipated to continue boosting the company’s financial performance. However, an escalated expense base remains a near-term concern.

Main Street Capital Corporation Price, Consensus and EPS Surprise

Main Street Capital Corporation price-consensus-eps-surprise-chart | Main Street Capital Corporation Quote

Main Street Capital currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of REITs

Starwood Property Trust, Inc. STWD reported third-quarter 2024 adjusted distributable earnings of 48 cents per share, which beat the Zacks Consensus Estimate of 46 cents. The reported figure compares unfavorably to 49 cents per share reported in the year-ago quarter.

Results benefited from a rise in revenues and a decline in expenses. Also, a strong balance sheet position was another positive. However, STWD recorded a year-over-year decline in book value per share (BVPS).

Annaly Capital Management, Inc. NLY reported third-quarter 2024 adjusted earnings available for distribution per average share of 66 cents, which missed the Zacks Consensus Estimate of 67 cents. The reported figure remained unchanged from the year-ago quarter.

NLY recorded a year-over-year decline in BVPS. Nonetheless, the company’s average yield on interest-earning assets improved in the reported quarter.

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