Why TICC Capital (TICC) Is Slipping on Friday

NEW YORK (TheStreet) -- TICC Capital (TICC) closed the week lower after the company announced a secondary offering of 6 million shares.

By market close Friday, shares had taken off 4.1% to $10. Trading volume of 7.7 million was more than 21 times its three-month daily average.

The closed-end fund said it would offer 6 million shares of common stock at $10.14 a share for total gross proceeds of around $60.8 million.

The underwriters have also been granted the option of purchasing up to an additional 900,000 shares.

In a statement, Greenwich, Conn.-based TICC Capital said it intends to use the net proceeds for "general corporate purposes, which may include investments in corporate debt and equity securities and investments in structured finance vehicles."

The offer's close is scheduled for March 19, pursuant to customary closing conditions.

Barclays, Deutsche Bank and UBS are acting as joint book-running managers for the offering.

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TheStreet Ratings team rates TICC CAPITAL CORP as a Buy with a ratings score of B. The team has this to say about their recommendation:

"We rate TICC CAPITAL CORP (TICC) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, expanding profit margins and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TICC's very impressive revenue growth greatly exceeded the industry average of 17.4%. Since the same quarter one year prior, revenues leaped by 76.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • The gross profit margin for TICC CAPITAL CORP is rather high; currently it is at 62.72%. It has increased significantly from the same period last year. Along with this, the net profit margin of 85.93% significantly outperformed against the industry average.
  • Net operating cash flow has slightly increased to -$34.57 million or 9.09% when compared to the same quarter last year. Despite an increase in cash flow of 9.09%, TICC CAPITAL CORP is still growing at a significantly lower rate than the industry average of 138.42%.
  • TICC CAPITAL CORP's earnings per share declined by 41.4% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. We feel it is likely to report a decline in earnings in the coming year. During the past fiscal year, TICC CAPITAL CORP increased its bottom line by earning $1.77 versus $0.44 in the prior year. For the next year, the market is expecting a contraction of 40.7% in earnings ($1.05 versus $1.77).

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

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