Hercules Capital Inc. Common Stock (HTGC)

FairStock Score: 91/100 — HIGH CONVICTION

Key Financials

Strengths

• Generates $245 million in annual free cash flow (8.7% yield on market cap)
• Solid return on equity of 16.2% above cost of capital
• Healthy net profit margin of 17.1% showing consistent profitability
• Revenue growth of 41.0% demonstrates strong top-line momentum
• Attractive 11.9% dividend yield providing steady income returns

Concerns

• Weak Piotroski F-Score of 1/9 suggests deteriorating financial quality across multiple dimensions
• Altman Z-Score of 0.8 places it in the financial distress zone—elevated bankruptcy risk

AI Analysis

Hercules Capital Inc. Common Stock is a small-cap financial services company valued at $2.8 billion. The business generates $532 million in annual revenue with a 17.1% net margin and $245 million in free cash flow. From a quality standpoint, Hercules shows weak Piotroski F-Score of 1/9 signaling deteriorating fundamentals and distressed Altman Z-Score of 0.8 warrants caution. On valuation, the stock is deeply undervalued on a P/E basis at 8.3x, with offers a 32% margin of safety vs Graham Number of $22. Growth dynamics show revenue growing at 41.0% and profit growth of 47.8%. The 11.9% dividend yield adds an income component for patient holders. Our composite FairStock Score of 91/100 reflects strong fundamentals overall. Investors should weigh the business quality against the current price and their own margin of safety requirements.

Bull Case

Hercules's 41% revenue growth trajectory could accelerate as it captures additional market share in the financial services sector. With $245 million in annual free cash flow (8.7% yield), management has ample capital for buybacks, dividends, or accretive acquisitions.

Bear Case

Macro headwinds or sector-specific disruption could pressure margins, particularly if competitive intensity increases in the financial services space. Regulatory changes, input cost inflation, or demand normalization represent underappreciated risks that could materially impact forward estimates.

Data from SEC filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer