AFC Gamma (NASDAQ:AFCG) Announces Quarterly Earnings Results

Key Points

• AFC Gamma reported adjusted earnings of $0.23 per share, beating the $0.19 analyst consensus, but quarterly revenue of $6.77 million fell short of the $8.59 million estimate.
• Net asset value rose to $8.25 per share, supported by investment income, share repurchases and unrealized gains. The company also cited a $1.3 billion investment pipeline, more than $70 million in liquidity and a portfolio weighted-average yield of 13.2% excluding non-accrual loans.
• Legacy cannabis credit problems remain a major risk: the Justice Grown loan is in maturity default and foreclosure proceedings have begun, while analysts maintain a generally cautious outlook with a consensus “Reduce” rating and a $4.50 price target.

AFC Gamma (NASDAQ:AFCG - Get Free Report) issued its quarterly earnings data on Thursday. The company reported $0.23 earnings per share for the quarter, topping analysts' consensus estimates of $0.19 by $0.04, FiscalAI reports. AFC Gamma had a positive return on equity of 1.48% and a negative net margin of 43.21%.The firm had revenue of $6.77 million for the quarter, compared to analyst estimates of $8.59 million.

Here are the key takeaways from AFC Gamma's conference call:

• Net asset value increased to $8.25 per share, up $0.35 sequentially, driven by $0.15 of net investment income, $0.17 of accretion from share repurchases, and approximately $0.08 of unrealized appreciation. Net investment income covered the $0.05 quarterly distribution by three times.
• AFC reported a $1.3 billion lower-middle-market pipeline and more than $70 million of available liquidity, supporting continued investment despite management’s expectation that originations will remain lumpy. The company also committed $7 million to a behavioral-health credit facility after quarter-end.
• The company repurchased approximately $2.8 million of stock during the quarter at an average price of $3.29 per share, leaving $2.2 million under its authorized $5 million program. Management said the buybacks were $0.17 accretive to NAV per share.
• Legacy cannabis credit issues remain a key risk: the Justice Grown loan is in maturity default and AFC has begun Article 9 foreclosure proceedings, while other non-accrual cannabis investments continue through liquidation or repayment processes.
• AFC’s portfolio totaled $290 million across 17 companies, consisting entirely of senior secured first-lien investments with a 13.2% weighted-average yield excluding non-accrual loans. Leverage was 1.1 times debt-to-equity, while management said it remains cautious on new cannabis lending because borrowers still face limited access to equity capital.

AFC Gamma Price Performance

AFCG stock traded up $0.20 during midday trading on Thursday, reaching $3.02. The stock had a trading volume of 92,482 shares, compared to its average volume of 241,035. AFC Gamma has a 52-week low of $2.06 and a 52-week high of $5.10. The company has a market cap of $71.13 million, a price-to-earnings ratio of -4.72 and a beta of 0.91. The company's fifty day simple moving average is $3.01 and its 200 day simple moving average is $2.84. The company has a current ratio of 1.41, a quick ratio of 1.41 and a debt-to-equity ratio of 0.68.

AFC Gamma Announces Dividend

The firm also recently declared a quarterly dividend, which was paid on Wednesday, July 15th. Shareholders of record on Tuesday, June 30th were issued a $0.05 dividend. This represents a $0.20 annualized dividend and a yield of 6.6%. The ex-dividend date of this dividend was Tuesday, June 30th. AFC Gamma's dividend payout ratio is presently -31.25%.

Analyst Ratings Changes

A number of equities research analysts have weighed in on the stock. Wall Street Zen lowered shares of AFC Gamma from a "strong-buy" rating to a "buy" rating in a research note on Saturday, August 1st. Weiss Ratings reaffirmed a "sell (d)" rating on shares of AFC Gamma in a report on Friday, July 17th. Finally, Zacks Research upgraded shares of AFC Gamma from a "strong sell" rating to a "hold" rating in a research report on Monday, April 20th. Two investment analysts have rated the stock with a Hold rating and one has issued a Sell rating to the company's stock. According to MarketBeat, AFC Gamma has an average rating of "Reduce" and a consensus price target of $4.50.

AFC Gamma Company Profile

AFC Gamma, Inc is a specialty finance real estate investment trust that focuses on providing structured financing solutions to companies operating and developing digital infrastructure and life science real estate assets. As a REIT, AFC Gamma seeks to generate attractive risk-adjusted returns through a diversified portfolio of loans, preferred equity and other financing structures that are secured by tangible property collateral or contractual revenue streams.

The company's primary business activities include originating, acquiring and managing secured loans and equity investments that support wireless and broadband network deployment, data center expansion, and life sciences facility development.

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