Hercules Capital’s Debt and Slower EPS Growth Draw Scrutiny

StockStory raised concerns about Hercules Capital, citing five-year earnings-per-share growth of 8% and a 6.1× net-debt-to-EBITDA ratio. The publisher said the figures pointed to weaker per-share profitability and limited room to manage borrowings.

Hercules’ earnings per share grew at an 8% annualized rate over five years, below revenue growth of 14.8%, according to the analysis. StockStory said that gap suggested the company had become less profitable on a per-share basis as it expanded.

The company reported $50.43 million in cash and $2.34 billion in debt in its most recent quarter. Its EBITDA over the past 12 months was $372.4 million. StockStory described the debt level relative to EBITDA as inadequate.

The analysis said the shares traded at 8.8 times forward earnings, or $16.95, when it was written. It called the valuation optically cheap but warned that fundamentals could leave room for downside. The article did not name the software company it said it preferred.

As of 16:57 UTC on Sept. 29, Hercules shares traded at $17.02, up 0.62% from the previous close. The article said the stock had gained 19.4% over six months, compared with a 22.1% rise for the S&P 500.