Why PennantPark Investment (PNNT) Stock Is Down Today

NEW YORK (TheStreet) -- Shares of PennantPark Investment  (PNNT) fell -4.47% to $11.33 in morning trading Friday after the company priced its public offering of common stock.

The company will sell 8.5 million shares at $11.63 a share to raise approximately $98,855,000 in gross proceeds. The offering contains an option for underwriters to purchase up to an additional 1.275 million shares.

PennantPark expects the offering to close on September 10.

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The company said it plans to use the net proceeds from the offering to "reduce outstanding indebtedness under its senior secured revolving credit facility, to invest in new or existing portfolio companies in accordance with its investment objectives or for other general corporate or strategic purposes."

More than 3.5 million shares had changed hands as of 10:19 a.m., compared to the average volume of 687,359.

Separately, TheStreet Ratings team rates PENNANTPARK INVESTMENT CORP as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate PENNANTPARK INVESTMENT CORP (PNNT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, notable return on equity, compelling growth in net income, good cash flow from operations and expanding profit margins. Although the company may harbor some minor weaknesses, we feel they are unlikely to have a significant impact on results."

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

  • PNNT's revenue growth has slightly outpaced the industry average of 3.0%. Since the same quarter one year prior, revenues slightly increased by 5.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Capital Markets industry and the overall market, PENNANTPARK INVESTMENT CORP's return on equity exceeds that of both the industry average and the S&P 500.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Capital Markets industry. The net income increased by 131.8% when compared to the same quarter one year prior, rising from $13.79 million to $31.95 million.
  • Net operating cash flow has increased to $84.79 million or 14.21% when compared to the same quarter last year. In addition, PENNANTPARK INVESTMENT CORP has also vastly surpassed the industry average cash flow growth rate of -89.11%.
  • The gross profit margin for PENNANTPARK INVESTMENT CORP is rather high; currently it is at 62.24%. Regardless of PNNT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, PNNT's net profit margin of 90.06% significantly outperformed against the industry.
  • You can view the full analysis from the report here: PNNT Ratings Report

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