AFC Gamma (NASDAQ:AFCG) Releases Quarterly Earnings Results, Beats Expectations By $0.12 EPS

Key Points

• AFC Gamma reported $0.28 in quarterly EPS, beating the $0.16 consensus by $0.12, but revenue of $6.7 million fell short of the $8.3 million estimate.
• Net investment income was $0.16 per share, and NAV rose to $8.55, up about 15% year to date. The company is expanding into lower middle-market and non-cannabis lending, citing a roughly $1.1 billion pipeline.
• Legacy troubled loans remain a concern: Justice Grown is in maturity default and recovery efforts for Devi continue. Shares fell 6.3% during Thursday’s trading.

AFC Gamma (NASDAQ:AFCG - Get Free Report) issued its quarterly earnings results on Thursday. The company reported $0.28 earnings per share for the quarter, beating analysts' consensus estimates of $0.16 by $0.12, FiscalAI reports. AFC Gamma had a net margin of 15.64% and a return on equity of 2.85%. The business had revenue of $6.70 million during the quarter, compared to analyst estimates of $8.30 million.

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

• AFC generated $0.16 per share in net investment income, and NAV rose to $8.55, up about 15% year to date. Repurchases below NAV added approximately $0.06 per share to NAV during the quarter.
• The company is shifting toward lower middle-market lending: five non-cannabis investments totaling about $93 million were performing in line with underwriting. AFC cited a roughly $1.1 billion pipeline and expects to commit to a $43 million healthcare-services facility, though management cautioned that deployments will be selective and uneven.
• Legacy credit issues remain unresolved: Justice Grown is in maturity default, with collateral auctions scheduled for November, while recovery efforts continue for Devi. AFC did not provide estimates for Justice Grown proceeds, citing active legal proceedings.
• AFC repurchased $19 million of its 2027 notes at a discount, generating an approximately $600,000 gain and reducing upcoming debt obligations. Quarter-end gross debt-to-equity was 1.03 times, down from 1.1 times in the prior quarter.
• Management described a mixed lending backdrop, citing elevated defaults and borrowing costs but also less competition for smaller deals. It said it is prioritizing underwriting discipline and lender protections over loan volume.

AFC Gamma Trading Down 6.3%

NASDAQ AFCG traded down $0.20 during trading hours on Thursday, hitting $2.99. The company's stock had a trading volume of 69,136 shares, compared to its average volume of 196,458. The stock has a fifty day moving average of $3.31 and a 200 day moving average of $2.97. AFC Gamma has a twelve month low of $2.06 and a twelve month high of $3.84. The firm has a market capitalization of $67.78 million, a P/E ratio of 15.74 and a beta of 1.00. The company has a quick ratio of 1.34, a current ratio of 1.34 and a debt-to-equity ratio of 0.69.

AFC Gamma Dividend Announcement

The firm also recently declared a quarterly dividend, which was paid on Thursday, October 15th. Investors of record on Wednesday, September 30th were paid a dividend of $0.05 per share. This represents a $0.20 dividend on an annualized basis and a dividend yield of 6.7%. The ex-dividend date of this dividend was Wednesday, September 30th. AFC Gamma's payout ratio is 105.26%.

Insider Transactions at AFC Gamma

In other AFC Gamma news, Director Leonard Tannenbaum bought 65,752 shares of the company's stock in a transaction on Friday, August 28th. The stock was bought at an average price of $3.53 per share, for a total transaction of $232,104.56. Following the transaction, the director owned 6,780,803 shares of the company's stock, valued at approximately $23,936,234.59. The trade was a 0.98% increase in their position. The purchase was disclosed in a document filed with the Securities & Exchange Commission, which is available at this link. Insiders have purchased 541,353 shares of company stock valued at $1,880,745 over the last quarter. 30.70% of the stock is currently owned by company insiders.

Analysts Set New Price Targets

A number of research analysts have commented on AFCG shares. Weiss Ratings upgraded AFC Gamma from a "sell (d)" rating to a "sell (d+)" rating in a research report on Thursday, August 20th. Wall Street Zen downgraded AFC Gamma from a "buy" rating to a "hold" rating in a research report on Saturday, August 15th. One analyst has rated the stock with a Hold rating and one has given a Sell rating to the company. Based on data from MarketBeat, the company presently has a consensus rating of "Reduce".

About AFC Gamma

AFC Gamma, Inc is a specialty finance company focused primarily on providing institutional debt financing to businesses operating in the regulated cannabis industry. The company has historically targeted established cannabis operators and other participants in the industry that may have limited access to traditional bank financing.

Its financing activities have included senior secured loans, mortgage-backed loans and other structured debt arrangements. Borrowers may use these funds to support the acquisition, development or expansion of cannabis cultivation, processing, manufacturing and retail facilities, as well as related working-capital and corporate needs.

AFC Gamma was founded in 2019 and became a publicly traded company in 2021.

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