Looking back on specialty finance stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including DigitalBridge (NYSE: DBRG) and its peers.
Specialty finance companies provide targeted lending or financial services for specific industries or needs. They benefit from expertise in particular sectors, often reduced competition in specialized niches, and tailored underwriting that can yield higher margins. Challenges include concentration risk in specific industries, difficulty achieving scale efficiencies, and potential vulnerability during sector-specific downturns affecting their specialized markets.
The 9 specialty finance stocks we track reported a mixed Q3. As a group, revenues missed analysts’ consensus estimates by 3%.
In light of this news, share prices of the companies have held steady as they are up 1.1% on average since the latest earnings results.
Weakest Q3: DigitalBridge (NYSE: DBRG)
Transforming from a traditional real estate investor to a digital-focused powerhouse in 2021, DigitalBridge Group (NYSE: DBRG) is a global digital infrastructure investment firm that manages capital and operates assets across data centers, cell towers, fiber networks, and edge infrastructure.
DigitalBridge reported revenues of $3.82 million, down 95% year on year. This print fell short of analysts’ expectations by 96.2%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ EBITDA and revenue estimates.
DigitalBridge delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. Unsurprisingly, the stock is down 14% since reporting and currently trades at $10.94.
Read our full report on DigitalBridge here, it’s free for active Edge members.
Best Q3: Encore Capital Group (NASDAQ: ECPG)
Operating in the often misunderstood world of debt collection since 1999, Encore Capital Group (NASDAQ: ECPG) purchases portfolios of defaulted consumer debt at deep discounts and works with individuals to recover these obligations while helping them toward financial recovery.
Encore Capital Group reported revenues of $460.4 million, up 25.4% year on year, outperforming analysts’ expectations by 11.9%. The business had an incredible quarter with a beat of analysts’ EPS and revenue estimates.
The market seems happy with the results as the stock is up 15.8% since reporting. It currently trades at $49.60.
Is now the time to buy Encore Capital Group? Access our full analysis of the earnings results here, it’s free for active Edge members.
Farmer Mac (NYSE: AGM)
Created by Congress in 1987 to build a bridge between Wall Street and rural America, Farmer Mac (NYSE: AGM) provides a secondary market for agricultural and rural loans, helping lenders increase their liquidity and lending capacity to serve rural America.
Farmer Mac reported revenues of $94.96 million, up 11.1% year on year, falling short of analysts’ expectations by 6%. It was a softer quarter as it posted a significant miss of analysts’ revenue estimates.
Interestingly, the stock is up 3.3% since the results and currently trades at $162.86.
Read our full analysis of Farmer Mac’s results here.
HA Sustainable Infrastructure Capital (NYSE: HASI)
With a proprietary "CarbonCount" metric that quantifies the environmental impact of each dollar invested, HA Sustainable Infrastructure Capital (NYSE: HASI) is an investment firm that finances and develops climate-positive infrastructure projects across renewable energy, energy efficiency, and ecological restoration.
HA Sustainable Infrastructure Capital reported revenues of $139.2 million, up 51.5% year on year. This number surpassed analysts’ expectations by 58.5%. It was a stunning quarter as it also recorded an impressive beat of analysts’ revenue estimates and a solid beat of analysts’ EBITDA estimates.
HA Sustainable Infrastructure Capital delivered the biggest analyst estimates beat and fastest revenue growth among its peers. The stock is up 18.3% since reporting and currently trades at $33.80.
Hercules Capital (NYSE: HTGC)
Named after the mythological hero known for his strength, Hercules Capital (NYSE: HTGC) is a business development company that provides debt financing to venture capital-backed and growth-stage technology and life sciences companies.
Hercules Capital reported revenues of $138.1 million, up 10.3% year on year. This print met analysts’ expectations. Aside from that, it was a mixed quarter as it also logged EPS in line with analysts’ estimates but revenue in line with analysts’ estimates.
The stock is up 2% since reporting and currently trades at $17.96.
Read our full, actionable report on Hercules Capital here, it’s free for active Edge members.
Market Update
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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