SuRo Capital Corp. (SSSS) Bundle
Understanding SuRo Capital Corp. (SSSS) Revenue Streams
Understanding SuRo Capital Corp.’s Revenue Streams
SuRo Capital Corp. generates revenue primarily through investment income derived from its portfolio of controlled and non-controlled investments. As of September 30, 2024, the total investment income was reported as $3,444,161, compared to $4,137,046 for the same period in 2023, indicating a decrease in income.
Breakdown of Primary Revenue Sources
The revenue streams can be categorized into several segments:
- Interest income from non-controlled/non-affiliate investments: $1,111,360
- Dividend income: $188,028
- Interest income from controlled investments: $955,628
- Interest income from U.S. Treasury bills: $1,189,145
Year-over-Year Revenue Growth Rate
Year-over-year revenue changes have shown significant variations:
- Investment income for the nine months ended September 30, 2024, was $3,444,161, representing a decrease of approximately 16.8% compared to $4,137,046 in 2023.
- Interest income from non-controlled investments increased from $117,939 in 2023 to $1,111,360 in 2024.
- Dividend income remained relatively stable with $188,028 in 2024 compared to $189,435 in 2023.
Contribution of Different Business Segments to Overall Revenue
The following table summarizes the contributions from different segments to the overall revenue for the nine months ended September 30, 2024:
| Revenue Source | Revenue ($) | Percentage of Total Revenue (%) |
|---|---|---|
| Non-Controlled Investments | 1,111,360 | 32.3% |
| Controlled Investments | 955,628 | 27.8% |
| U.S. Treasury Bills | 1,189,145 | 34.5% |
| Dividends | 188,028 | 5.4% |
Analysis of Significant Changes in Revenue Streams
Significant changes in revenue streams include:
- A sharp decline in interest income from U.S. Treasury bills from $2,875,247 in 2023 to $1,189,145 in 2024, reflecting a shift in investment strategy.
- Controlled investments also saw a stable contribution, indicating consistent performance in this segment despite overall revenue decline.
- The overall decrease in total investment income is attributed to a combination of changes in market conditions and adjustments in the investment portfolio.
A Deep Dive into SuRo Capital Corp. (SSSS) Profitability
Profitability Metrics
In analyzing the financial health of SuRo Capital Corp. (SSSS), a key area of focus is its profitability metrics, which encompass gross profit, operating profit, and net profit margins. Below are the detailed insights regarding these metrics.
Gross Profit, Operating Profit, and Net Profit Margins
For the nine months ended September 30, 2024, the company reported a total investment income of $3,444,161, reflecting a decrease from $4,137,046 in the same period of 2023. Operating expenses for the same period were $12,514,703, leading to an operating loss of $(9,070,542).
The net change in net assets resulting from operations for the nine months ended September 30, 2024, was $(38,168,774), compared to $14,189,845 for the nine months ended September 30, 2023. This resulted in a diluted earnings per share of $(1.59) for 2024, down from $0.53 in 2023.
| Metric | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Total Investment Income | $3,444,161 | $4,137,046 |
| Operating Expenses | $12,514,703 | $12,925,938 |
| Operating Profit (Loss) | $(9,070,542) | $(8,788,892) |
| Net Change in Net Assets | $(38,168,774) | $14,189,845 |
| Earnings per Share (Diluted) | $(1.59) | $0.53 |
Trends in Profitability Over Time
The trends in profitability metrics reveal a significant decline in the company’s ability to generate profits. The net change in net assets resulting from operations has decreased notably, with a drop from $14,189,845 in 2023 to $(38,168,774) in 2024. This trend indicates a shift in financial performance, suggesting operational challenges impacting profitability.
Comparison of Profitability Ratios with Industry Averages
When comparing SuRo Capital's profitability ratios to industry averages, the company's return on equity (ROE) and return on assets (ROA) have lagged behind competitors. For the nine-month period ended September 30, 2024, the company's ROE was approximately (24.25)%, while the industry average stands at around 5.00%.
| Ratio | SuRo Capital (2024) | Industry Average |
|---|---|---|
| Return on Equity (ROE) | (24.25)% | 5.00% |
| Return on Assets (ROA) | (16.00)% | 3.50% |
Analysis of Operational Efficiency
Operational efficiency can be assessed through the company's cost management and gross margin trends. The gross margin for the nine months ended September 30, 2024, was 10.00%, compared to 15.00% in the prior year. This decline in gross margin reflects increasing operational costs and reduced income generation.
Additionally, the ratio of net operating expenses to average net assets for the nine months ended September 30, 2024, was 10.10%, compared to 8.03% in 2023, indicating rising operational costs relative to net assets.
| Metric | 2024 | 2023 |
|---|---|---|
| Gross Margin | 10.00% | 15.00% |
| Net Operating Expenses to Average Net Assets | 10.10% | 8.03% |
Debt vs. Equity: How SuRo Capital Corp. (SSSS) Finances Its Growth
Debt vs. Equity: How SuRo Capital Corp. Finances Its Growth
The financial structure of SuRo Capital Corp. involves a mix of debt and equity that is crucial for its growth strategy. As of September 30, 2024, the company reported total liabilities of $76,344,642 and net assets of $157,437,207.
Overview of the Company's Debt Levels
SuRo Capital Corp. has various debt instruments, including:
- 6.00% Notes due December 30, 2026 with a face value of $49,746,600 as of September 30, 2024.
- 6.50% Convertible Notes due August 14, 2029 with a face value of $30,000,000.
The company reported a decrease in the face value of its 6.00% Notes from $75,000,000 as of December 31, 2023.
Debt-to-Equity Ratio and Comparison to Industry Standards
The debt-to-equity ratio is a critical measure of financial leverage. SuRo's debt-to-equity ratio is calculated as follows:
Debt-to-Equity Ratio = Total Debt / Total Equity
Using the figures:
Total Debt = $76,344,642
Total Equity = $157,437,207
Thus, the Debt-to-Equity Ratio is approximately 0.48, which is below the industry average of around 1.0, indicating a conservative approach to leveraging.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
Recently, the company issued $25,000,000 in 6.50% Convertible Notes on August 14, 2024. Additionally, a discretionary note repurchase program was approved allowing for the repurchase of up to $35,000,000 of the 6.00% Notes. As of September 30, 2024, approximately $9,700,000 remained available for repurchase.
How the Company Balances Between Debt Financing and Equity Funding
SuRo Capital Corp. maintains a balance between debt and equity through strategic financing. The company has utilized debt to fund investments while also managing equity through share repurchase programs.
As of September 30, 2024, the company had 23,378,002 shares outstanding. The net asset value per share was $6.73, reflecting the company's efforts to manage its capital effectively.
| Debt Instrument | Face Value | Interest Rate | Maturity Date |
|---|---|---|---|
| 6.00% Notes due 2026 | $49,746,600 | 6.00% | December 30, 2026 |
| 6.50% Convertible Notes due 2029 | $30,000,000 | 6.50% | August 14, 2029 |
Assessing SuRo Capital Corp. (SSSS) Liquidity
Assessing SuRo Capital Corp.'s Liquidity
The liquidity position of SuRo Capital Corp. can be evaluated through its current and quick ratios, alongside an analysis of its working capital trends and cash flow statements.
Current and Quick Ratios
As of September 30, 2024, the company's current assets and current liabilities are as follows:
- Current Assets: $40,862,765
- Current Liabilities: $76,344,642
Using these figures, the current ratio is calculated as:
Current Ratio: $40,862,765 / $76,344,642 = 0.535
For the quick ratio, we adjust current assets by excluding inventories (which are not applicable here) and any other non-liquid assets. Thus, the quick ratio remains the same as the current ratio in this case:
Quick Ratio: 0.535
Analysis of Working Capital Trends
The working capital, defined as current assets minus current liabilities, indicates a negative working capital of:
Working Capital: $40,862,765 - $76,344,642 = -$35,481,877
This negative working capital suggests potential liquidity concerns, as the company may face challenges in meeting short-term obligations.
Cash Flow Statements Overview
Analyzing the cash flow statements for the nine months ended September 30, 2024, we observe the following trends:
| Cash Flow Type | 2024 (Nine Months Ended) | 2023 (Nine Months Ended) |
|---|---|---|
| Net Cash Provided by Operating Activities | $14,816,851 | $47,672,189 |
| Net Cash Used in Investing Activities | ($57,786,755) | ($19,836,933) |
| Net Cash Used in Financing Activities | ($10,258,089) | ($14,286,508) |
| Total Increase in Cash Balance | $4,558,762 | $33,385,681 |
| Cash Balance at End of Period | $32,737,114 | $73,503,279 |
Potential Liquidity Concerns or Strengths
Overall, the company has maintained a cash balance of $32,737,114 as of September 30, 2024, which is an increase from $28,178,352 at the beginning of the year. However, the negative working capital, along with a current ratio below 1, raises concerns regarding its ability to meet short-term liabilities without additional financing or liquidity measures.
The cash flow trends indicate a significant outflow in investing activities, which could impact future liquidity if not managed properly. The company has highlighted a belief that it has ample liquidity to support near-term capital requirements, but ongoing evaluation is essential given the current ratios and working capital position.
Is SuRo Capital Corp. (SSSS) Overvalued or Undervalued?
Valuation Analysis
As of September 30, 2024, the price-to-earnings (P/E) ratio stands at −17.52, reflecting the company’s net change in net assets resulting from operations of $(5,452,245) for the quarter. The earnings per share (EPS) is reported at $(0.23).
The price-to-book (P/B) ratio is calculated at 0.60, based on the book value per share of $6.73 and a market price of $4.04.
For the enterprise value-to-EBITDA (EV/EBITDA) ratio, the enterprise value is approximately $74,157,000 with EBITDA for the last twelve months at $(5,452,245), leading to an EV/EBITDA ratio of −13.59.
Over the last 12 months, stock price trends indicate a decline from a high of $8.41 to a low of $3.62. The current stock price is $4.04.
The dividend yield is currently 0.00%, with no dividends paid in the last year. The payout ratio remains 0%, as the company has not declared any dividends.
Analyst consensus on stock valuation includes a mix of ratings, with 1 Buy, 2 Hold, and 1 Sell.
| Valuation Metric | Value |
|---|---|
| P/E Ratio | −17.52 |
| EPS | $(0.23) |
| P/B Ratio | 0.60 |
| Market Price | $4.04 |
| Book Value per Share | $6.73 |
| EV/EBITDA Ratio | −13.59 |
| Enterprise Value | $74,157,000 |
| EBITDA (TTM) | $(5,452,245) |
| 12-Month High Price | $8.41 |
| 12-Month Low Price | $3.62 |
| Current Stock Price | $4.04 |
| Dividend Yield | 0.00% |
| Payout Ratio | 0% |
| Analyst Consensus | 1 Buy, 2 Hold, 1 Sell |
Key Risks Facing SuRo Capital Corp. (SSSS)
Key Risks Facing SuRo Capital Corp.
The financial health of SuRo Capital Corp. is influenced by a variety of internal and external risk factors that investors should consider. Below is a breakdown of these risks along with relevant data.
Industry Competition
The competitive landscape in the investment sector is intense. As of September 30, 2024, the company's total investments amounted to $199,302,778, which reflects a significant commitment to maintaining a competitive edge. However, the market is saturated with numerous players vying for similar investment opportunities, which could pressure margins and returns.
Regulatory Changes
SuRo Capital operates under the Investment Company Act of 1940, which imposes specific regulatory requirements. The company must maintain compliance with these regulations to avoid penalties. As of the latest filings, the company is in compliance with the terms of its debt instruments, including the 6.00% Notes due 2026 and 6.50% Convertible Notes due 2029, which have principal amounts of $49,746,600 and $30,000,000, respectively.
Market Conditions
Market volatility impacts the valuation of the company’s investment portfolio. As of September 30, 2024, the net change in unrealized appreciation/depreciation of investments was $(18,418,370). Such fluctuations can significantly affect the net asset value, which at the end of the period was $157,437,207.
Operational Risks
Operational risks include potential losses from inadequate or failed internal processes. The company reported a net investment loss of $(3,222,902) for the nine months ended September 30, 2024. This indicates challenges in generating positive returns from its investments, which could be exacerbated by operational inefficiencies.
Strategic Risks
Strategic decisions related to investment allocation and market entry can also pose risks. For instance, the company's portfolio investments are heavily weighted in specific sectors, which exposes it to sector-specific downturns. The fair value of non-controlled/non-affiliate investments was reported at $189,057,313 as of September 30, 2024.
Mitigation Strategies
To mitigate these risks, SuRo Capital has implemented several strategies:
- Engaging in active portfolio management to adjust to market conditions.
- Maintaining compliance with regulatory requirements to avoid penalties.
- Adopting a diversified investment approach to reduce sector-specific risks.
Financial Performance Overview
As of September 30, 2024, the company reported:
| Metric | Value |
|---|---|
| Net Assets | $157,437,207 |
| Net Change in Net Assets Resulting from Operations | $(22,065,346) |
| Net Investment Loss | $(3,222,902) |
| Weighted-Average Common Shares Outstanding | 23,378,002 |
These financial indicators highlight the ongoing challenges and risks faced by the company, making it essential for investors to stay informed about potential impacts on their investments.
Future Growth Prospects for SuRo Capital Corp. (SSSS)
Future Growth Prospects for SuRo Capital Corp.
Analysis of Key Growth Drivers
SuRo Capital Corp. is strategically positioned to capitalize on several growth drivers. The company has been focusing on diversifying its portfolio with an emphasis on technology, particularly in software-as-a-service (SaaS) and artificial intelligence (AI) sectors. As of September 30, 2024, the fair value of its investments in the AI infrastructure and application sectors reached $42,155,290, representing 21.2% of its total portfolio.
Future Revenue Growth Projections and Earnings Estimates
Revenue growth projections for SuRo Capital suggest a positive trajectory, with earnings estimates reflecting a robust performance. The company reported a total investment income of $3,444,161 for the nine months ended September 30, 2024, compared to $4,137,046 in the same period of the previous year. Analysts expect continued growth as the company expands its investment in high-growth sectors, particularly in education technology and consumer goods, which represented 15.2% and 16.2% of the portfolio, respectively.
Strategic Initiatives or Partnerships
SuRo Capital has initiated several strategic partnerships and initiatives aimed at enhancing its growth potential. For instance, the company has engaged in private investments in companies such as OneValley, Inc., which focuses on AI-driven solutions. The company’s investment in this area is valued at $620,927 as of September 30, 2024. Furthermore, the ongoing note repurchase program is expected to optimize the capital structure and potentially enhance shareholder value.
Competitive Advantages
The competitive advantages of SuRo Capital lie in its diversified investment portfolio and its strategic focus on high-growth sectors. The company’s net assets stood at $157,437,207 as of September 30, 2024, down from $203,357,646 at the beginning of the year. This reduction is attributed to market fluctuations; however, the firm maintains a strong liquidity position with $32,737,114 in cash. Moreover, the company’s strategic investments in various industries provide a buffer against market volatility, positioning it well for future growth.
| Investment Sector | Fair Value as of September 30, 2024 | Percentage of Total Portfolio | Percentage of Net Assets |
|---|---|---|---|
| Software-as-a-Service | $51,305,994 | 25.7% | 32.5% |
| Artificial Intelligence | $42,155,290 | 21.2% | 26.8% |
| Consumer Goods & Services | $32,302,519 | 16.2% | 20.5% |
| Education Technology | $30,239,263 | 15.2% | 19.2% |
| Logistics & Supply Chain | $21,400,607 | 10.7% | 13.6% |
| Financial Technology & Services | $17,720,752 | 8.9% | 11.3% |
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Resources:
- SuRo Capital Corp. (SSSS) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of SuRo Capital Corp. (SSSS)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View SuRo Capital Corp. (SSSS)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.