Fifth Street Finance Corp. (FSC) Stock Rating Reaffirmed by National Securities

National Securities reaffirmed their neutral rating on shares of Fifth Street Finance Corp. (NASDAQ:FSC) in a research report released on Monday morning. National Securities currently has a $4.00 price objective on the credit services provider’s stock.

“• FSC posted NII/share of $0.13 for fiscal 2Q17, matching our own estimate but falling short of the $0.15 consensus estimate. We expect NII/share to trend lower through fiscal 2018 as a result of what is likely to be a much more cautious and senior secured underwriting focus for FSC coupled with general spread compression. These factors will likely outweigh the tailwind of (hopefully) fewer problem credits dragging on overall portfolio yields going forward. As a result of the NIM (net investment margin) declines we model we expect the quarterly dividend to be reduced to $0.10/share in fiscal 3Q18 from $0.125/share currently.

• NAV/share decreased modestly Q/Q to $7.23 from $7.31, driving annualized economic return (changes in NAV/share plus dividends divided by beginning of period NAV/share) of 3.5% for the quarter. The decrease in NAV was largely driven by $116.0 million of realized losses, largely offset by unrealized appreciation of $106.5 million.

• We are revising our fiscal 2017 NII/share estimate to $0.55 from $0.54 and are maintaining our fiscal 2018 NII/share estimate of $0.50.,” the firm’s analyst wrote.

Several other analysts have also recently commented on FSC. Barclays PLC set a $5.00 target price on shares of Fifth Street Finance Corp. and gave the company a hold rating in a research report on Tuesday, February 14th. Zacks Investment Research upgraded shares of Fifth Street Finance Corp. from a sell rating to a hold rating in a research report on Wednesday, March 22nd. Raymond James Financial, Inc. reiterated an underperform rating on shares of Fifth Street Finance Corp. in a research report on Thursday, March 30th. BMO Capital Markets reiterated a hold rating and set a $4.00 target price on shares of Fifth Street Finance Corp. in a research report on Tuesday, April 11th. Finally, Keefe, Bruyette & Woods set a $5.00 target price on shares of Fifth Street Finance Corp. and gave the company a hold rating in a research report on Wednesday, May 10th. Two equities research analysts have rated the stock with a sell rating and seven have issued a hold rating to the stock. The stock currently has a consensus rating of Hold and a consensus price target of $4.88.

Analyst Recommendations for Fifth Street Finance Corp. (NASDAQ:FSC)

Fifth Street Finance Corp. (NASDAQ:FSC) traded down 0.598% during midday trading on Monday, hitting $4.155. The stock had a trading volume of 319,437 shares. The company’s market cap is $585.69 million. Fifth Street Finance Corp. has a one year low of $4.12 and a one year high of $6.32. The stock’s 50-day moving average is $4.41 and its 200-day moving average is $5.00.

Fifth Street Finance Corp. (NASDAQ:FSC) last issued its earnings results on Wednesday, May 10th. The credit services provider reported $0.13 EPS for the quarter, missing the consensus estimate of $0.15 by $0.02. The business had revenue of $45.56 million for the quarter, compared to the consensus estimate of $50.76 million. Fifth Street Finance Corp. had a negative net margin of 33.22% and a positive return on equity of 9.13%. Equities analysts predict that Fifth Street Finance Corp. will post $0.57 EPS for the current fiscal year.

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The firm also recently disclosed a quarterly dividend, which will be paid on Friday, September 29th. Stockholders of record on Friday, September 15th will be paid a dividend of $0.125 per share. This represents a $0.50 dividend on an annualized basis and a dividend yield of 11.96%. This is an increase from Fifth Street Finance Corp.’s previous quarterly dividend of $0.02. The ex-dividend date is Thursday, September 14th. Fifth Street Finance Corp.’s dividend payout ratio is currently -130.91%.

In other Fifth Street Finance Corp. news, major shareholder Leonard M. Tannenbaum acquired 594,740 shares of Fifth Street Finance Corp. stock in a transaction dated Friday, March 10th. The stock was bought at an average cost of $4.41 per share, for a total transaction of $2,622,803.40. Following the purchase, the insider now directly owns 12,278,720 shares in the company, valued at approximately $54,149,155.20. The purchase was disclosed in a filing with the SEC, which is available at the SEC website. Also, major shareholder Leonard M. Tannenbaum acquired 368,073 shares of Fifth Street Finance Corp. stock in a transaction dated Wednesday, March 29th. The shares were acquired at an average price of $4.74 per share, with a total value of $1,744,666.02. Following the completion of the purchase, the insider now owns 15,512,816 shares in the company, valued at $73,530,747.84. The disclosure for this purchase can be found here. Over the last 90 days, insiders have bought 4,437,115 shares of company stock valued at $20,253,230. Company insiders own 0.08% of the company’s stock.

Institutional investors have recently bought and sold shares of the company. The Manufacturers Life Insurance Company purchased a new stake in shares of Fifth Street Finance Corp. during the third quarter valued at about $21,791,000. Muzinich & Co. Inc. increased its stake in shares of Fifth Street Finance Corp. by 116.7% in the first quarter. Muzinich & Co. Inc. now owns 6,779,107 shares of the credit services provider’s stock valued at $31,319,000 after buying an additional 3,650,684 shares during the period. Ares Management LLC increased its stake in shares of Fifth Street Finance Corp. by 112.5% in the third quarter. Ares Management LLC now owns 1,876,907 shares of the credit services provider’s stock valued at $10,905,000 after buying an additional 993,699 shares during the period. Morgan Stanley increased its stake in shares of Fifth Street Finance Corp. by 104.5% in the first quarter. Morgan Stanley now owns 1,539,829 shares of the credit services provider’s stock valued at $7,114,000 after buying an additional 786,975 shares during the period. Finally, Two Sigma Investments LP increased its stake in shares of Fifth Street Finance Corp. by 228.3% in the fourth quarter. Two Sigma Investments LP now owns 928,768 shares of the credit services provider’s stock valued at $4,987,000 after buying an additional 645,862 shares during the period. Institutional investors own 32.17% of the company’s stock.

About Fifth Street Finance Corp.

Fifth Street Finance Corp. is a specialty finance company. The Company is a closed-end, non-diversified management investment company. The Company acts as a business development company (BDC). The Company’s investment objective is to maximize its portfolio’s total return by generating current income from its debt investments, and capital appreciation from its equity investments.

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