Fifth Street Finance says 1Q profit may fall short

Share: 

City of Industry, CA --(www.USEquityNews.com)-- 01/26/2010 - Credit Services industry alert provided by U.S. Equity News. WHITE PLAINS, N.Y. (AP) -- Fifth Street Finance Corp. on Friday issued a first-quarter profit estimate that could fall short of Wall Street expectations.


The business financing company estimated net investment income of 21 cents per share to 24 cents per share for the final three months of the year. Analysts polled by Thomson Reuters expect a profit of 24 cents per share, on average.

The company, which invests in small and mid-size businesses, also said it plans to raise $78.4 million through a public stock offering of 7 million shares.

In addition, Fifth Street said it received a nonbinding term sheet from a lender for a potential additional credit line of up to $100 million.

Copyright © 2009 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten, or redistributed without the prior written authority of The Associated Press. [Read the full article]

In a pattern we've noticed before, Fifth Street Finance (FSC) provided a preview of fourth-quarter earnings (its fiscal first quarter), NAV and bad debt. The news looked pretty good. Simultaneously, the Company announced a major stock offering, just 3 months after the previous offering. Fifth Street suggested net investment income per share would come in at between $0.21-$0.24 per share, down from $0.26 last quarter but expected due to the dilutive stock offering in September. That's still below the recently-upped dividend of $0.30, suggesting that FSC is adopting the strategy of growing assets and earnings to catch up with its payout over time. The NAV is projected to remain essentially unchanged, which means the stock (which closed Thursday at $11.74) is being sold at a premium to NAV. The market is clearly supportive, especially as FSC is proposing to sell 8 million shares to go with 50 million already outstanding. [Read the full article]

NEW YORK (AP) -- Fitch Ratings issued a report Friday that showed delinquent balances on credit cards hit an all-time high in November.

Balances that were 60 days or more late reached a record 4.54 percent. That surpassed the previous high of 4.45 percent set this past June, according to the report.

Chargeoffs, or loans banks consider unrecoverable, crept up to 10.68 percent from 10.09 percent in the prior month. A record high of 11.52 percent was set in September.

Fitch said it expects chargeoffs to become more widespread in coming months as consumers continue to struggle with debt and unemployment.

The ratings agency doesn't expect the deterioration to be severe, however. Fitch predicts U.S. unemployment will peak at 10.4 percent in the second-quarter of 2010 and will remain above the 10 percent throughout the year.

Copyright © 2009 The Associated Press. All rights reserved. [Read the full article]

NEW YORK (AP) -- Shares of Sallie Mae fell Friday after an analyst downgraded the student lender, citing its uncertain long-term outlook for growth.

Ladenburg Thalman analyst Brad Ball lowered his rating on the Reston, Va., company to "Neutral" from "Buy" and reduced his share price target to $11.97, from $13.

Shares of Sallie Mae, formally known as SLM Corp., fell 79 cents, or 6.7 percent, to $11.02 in afternoon trading. The stock has ranged from $3.11 to $12.89 over the past year.

Earlier this week, the company posted a fourth-quarter profit, compared a loss in the same quarter a year ago, partly as a result of higher revenue from fees and interest. But results missed Wall Street expectations.

Ball noted that the credit quality of Sallie's borrowers had improved, but that growth in private lending has been anemic because of lower demand and tighter underwriting standards. [Read the full article]

About U.S. Equity News

U.S. Equity News provides information, resources and news services for investors of small-cap, micro-cap and emerging companies. U.S. Equity News distributes RSS news feeds and a free subscription-based newsletter available through its website at www.usequitynews.com.

U.S. Equity News is a financial news distribution service by Equity Solutions, Inc. (www.equityirsolutions.com) that provides a platform for public companies to disseminate important news to key Wall Street interest such as shareholders and new investors. Equity Solutions, Inc. can assist by providing an effective increase in the awareness of a public company's news, development and corporate story through its proprietary network and its financial portal. U.S. Equity News and its affiliates charge each client cash for news distribution and may take an equity position in the companies mentioned herein, please visit the disclaimer at www.USEquityNews.com.

Contact Information:
U.S. Equity News
Tel: (626) 961-8039
Email: info@usequitynews.com

Comments:
Disclaimer: User Comments do not reflect the views of US Equity News, and we are not responsible for the content of users' comments. We also reserve the right to edit or delete comments to our discretion.

---