Looking back on specialty finance stocks’ Q3 earnings, we examine this quarter’s best and worst performers, including Encore Capital Group (NASDAQ: ECPG) 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. On average, they are relatively unchanged since the latest earnings results.

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. This print exceeded analysts’ expectations by 11.9%. Overall, it was an incredible quarter for the company with a beat of analysts’ EPS and revenue estimates.

“Encore delivered another quarter of strong performance in Q3 as our industry leadership and operational improvement become increasingly evident in our results,” said Ashish Masih, President and Chief Executive Officer.

Interestingly, the stock is up 12.8% since reporting and currently trades at $48.30.

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.

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, outperforming analysts’ expectations by 58.5%. The business had a stunning quarter with a solid beat of analysts’ revenue estimates and an impressive beat of analysts’ EBITDA estimates.

HA Sustainable Infrastructure Capital scored the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 18.1% since reporting. It currently trades at $33.74.

Is now the time to buy HA Sustainable Infrastructure Capital? Access our full analysis of the earnings results here, it’s free for active Edge members.

Main Street Capital (NYSE: MAIN)

With a focus on building long-term partnerships rather than quick transactions, Main Street Capital (NYSE: MAIN) is a business development company that provides long-term debt and equity capital to lower middle market and middle market companies.

Main Street Capital reported revenues of $139.8 million, up 2.2% year on year. This print was in line with analysts’ expectations. Taking a step back, it was a mixed quarter as it recorded EPS in line with analysts’ estimates.

The stock is up 3.5% since reporting and currently trades at $59.20.

Read our full, actionable report on Main Street Capital here, it’s free for active Edge members.

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 result met analysts’ expectations. Zooming out, it was a mixed quarter as it also recorded EPS in line with analysts’ estimates but revenue in line with analysts’ estimates.

The stock is flat since reporting and currently trades at $17.66.

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.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.