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Owl Rock Capital (ORCC) Q1 Earnings Beat, Revenues Rise Y/Y

Owl Rock Capital Corporation ORCC reported first-quarter 2023 earnings per share of 45 cents, which beat the Zacks Consensus Estimate by a penny. The bottom line also improved from 31 cents a year ago. The results were supported by growth in the portfolio, increased interest rates and record net investment income. However, the positives were partially offset by higher costs.

The total investment income of ORCC amounted to $377.6 million, which increased from $350.5 million a year ago. The top line beat the Zacks Consensus Estimate by 3.4% and our estimate of $313 million. ORCC achieved a record net investment income on the back of constant earnings momentum from high-interest rates.

Owl Rock Capital Corporation Price, Consensus and EPS Surprise

Owl Rock Capital Corporation Price, Consensus and EPS Surprise
Owl Rock Capital Corporation Price, Consensus and EPS Surprise

Owl Rock Capital Corporation price-consensus-eps-surprise-chart | Owl Rock Capital Corporation Quote

Q1 Update

Net investment income rose to $177.9 million from $122.4 million a year ago.

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Total new investment commitments were $175.1 million across three new portfolio companies and eight existing ones. The metric plunged 67% year over year in the quarter under review.

Owl Rock Capital ended the first quarter with investments in 187 portfolio companies, backed by an aggregate fair value of $13.2 billion. Based on the fair value, the average investment size in each portfolio company was $70.4 million as of Mar 31, 2023.

Total expenses escalated to $196.4 million in the first quarter from $141 million a year ago, primarily due to higher interest expenses, gross management, incentive fees and other general and administrative expenses.

The company recorded a net income of $201.8 million in the first quarter, up from $44 million in the prior-year quarter.

Financial Update (as of Mar 31, 2023)

Owl Rock Capital exited the first quarter with cash and restricted cash of $399.5 million, which declined from $455.1 million as of Dec 31, 2022. Total assets of $13.7 billion increased from $13.5 billion at 2022-end.

Debt was $7.4 billion, up from $7.2 billion at 2022-end. ORCC had $1.3 billion of undrawn capacity under its credit facilities.

Net cash from operating activities in the first quarter was $46.3 million compared with the prior year’s cash usage of $13.5 million.

At first-quarter end, net debt to equity was 1.21X compared with 1.19X at 2022-end.

Dividend & Repurchase Update

The board of directors at Owl Rock Capital declared a second-quarter 2023 dividend of 33 cents per share to be paid out on or before Jul 14, 2023, to shareholders of record as of Jun 30, 2023. It also provided a first-quarter 2023 supplemental dividend of 6 cents per share.

ORCC brought in a share buyback program of $150 million on Nov 1, 2022, with a life span of 18 months. As of May 10, 2023, $73.7 million of ORCC stock was purchased, of which 66.6% was bought by ORCC at a price of $12.22 per share.

Outlook

Most of Owl Rock Capital’s assets are floating, so an improving interest rate environment is projected to drive net investment income. Included in investment income are pre-payment fees, which are expected to increase as the interest rate stabilizes, thereby increasing repayments.

Zacks Rank

Owl Rock Capital currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Players

Some other players from the Financial-Miscellaneous Services segment that have reported results so far are Euronet Worldwide EEFT, PRA Group, Inc. PRAA and American Express Company AXP. Let’s see how they’ve performed.

Euronet Worldwide reported first-quarter 2023 adjusted earnings of 87 cents per share, which outpaced the Zacks Consensus Estimate by 2.4%. The bottom line improved 26% year over year.

Total revenues amounted to $787.2 million, which rose 10% year over year or 14% on a constant-currency basis in the quarter under review. The top line beat the consensus mark by 2.3% and our estimate of $763.2 million.

PRA Group incurred a first-quarter 2023 loss of $1.50 per share against the Zacks Consensus Estimate of earnings of 45 cents per share. Notably, earnings of 97 cents per share were reported in the prior-year quarter.

Total revenues dropped 35.4% year over year to $155.5 million. Also, the top line missed the consensus mark by 30.2%.

American Express reported first-quarter 2023 earnings of $2.40 per share, missing the Zacks Consensus Estimate of $2.64 and our estimate of $2.61. The bottom line also decreased 12% year over year.

For the quarter under review, AXP’s total revenues net of interest expense increased 22% year over year to $14,281 million. The top line beat the Zacks Consensus Estimate by 1.9% and came above our estimate of $14,017.9 million.

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American Express Company (AXP) : Free Stock Analysis Report

PRA Group, Inc. (PRAA) : Free Stock Analysis Report

Owl Rock Capital Corporation (ORCC) : Free Stock Analysis Report

Euronet Worldwide, Inc. (EEFT) : Free Stock Analysis Report

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