Sound Point Meridian Capital (NYSE:SPMC) Releases Earnings Results, Misses Expectations By $0.01 EPS

Key Points

• Sound Point Meridian Capital reported quarterly EPS of $0.28, missing the $0.29 consensus estimate by $0.01. Net investment income also fell short of its $0.60-per-share distribution.
• Net asset value declined to $9.09 per share from $9.88, with management estimating a further drop to $8.41–$8.51 in October. The company cited realized losses, distributions exceeding income, and weak CLO equity pricing.
• Management said monthly NII improved to about $0.11 per share in October, but the senior securities coverage ratio also weakened and moved closer to the 200% threshold the company seeks to maintain.

Sound Point Meridian Capital (NYSE:SPMC - Get Free Report) announced its quarterly earnings data on Thursday. The company reported $0.28 EPS for the quarter, missing analysts' consensus estimates of $0.29 by ($0.01), Zacks reports.

Here are the key takeaways from Sound Point Meridian Capital's conference call:

• Quarterly income did not cover the distribution: NII was $0.28 per share versus $0.60 per share in distributions. The company said spread tightening and higher model loss reserves for AI-impacted software loans weighed on income.
• NAV fell to $9.09 per share from $9.88, and the company’s estimated October NAV was lower still, at $8.41–$8.51. Management attributed the decline to realized losses, distributions exceeding NII, and weak market pricing for CLO equity.
• The company said its senior securities coverage ratio was 217% at quarter-end and declined in October, putting it closer to the 200% threshold it is focused on maintaining. Management cited portfolio trading and repayment of its senior facility as tools to manage the ratio, while noting that share repurchases could increase leverage.
• Management reported that monthly NII had risen from about $0.08 per share to more than $0.09 in the quarter and approximately $0.11 in October. It pointed to portfolio rotation, liability refinancing, expense control, and a temporary fee waiver as ways to narrow the gap with the distribution, though coverage remains short.
• Management sees potential for loan spreads and CLO equity income to improve if loan-market supply and demand move toward balance, and said it has begun to view some new-issue CLO opportunities more favorably. It also acknowledged continued uncertainty around credit quality, investor demand, and CLO equity valuations.

Sound Point Meridian Capital Stock Up 6.2%

Shares of Sound Point Meridian Capital stock traded up $0.36 during trading on Thursday, hitting $6.26. The stock had a trading volume of 72,396 shares, compared to its average volume of 32,851. Sound Point Meridian Capital has a 1 year low of $5.43 and a 1 year high of $16.67. The stock has a 50 day simple moving average of $7.65 and a 200 day simple moving average of $9.74. The company has a market capitalization of $128.41 million, a PE ratio of -1.08 and a beta of 1.39.

Analyst Upgrades and Downgrades

SPMC has been the topic of a number of recent analyst reports. B. Riley Financial cut their target price on Sound Point Meridian Capital from $10.50 to $10.00 and set a "neutral" rating on the stock in a research report on Wednesday, August 12th. Zacks Research raised Sound Point Meridian Capital from a "hold" rating to a "strong-buy" rating in a report on Tuesday, October 27th. One investment analyst has rated the stock with a Strong Buy rating, one has assigned a Buy rating and two have given a Hold rating to the company's stock. Based on data from MarketBeat, Sound Point Meridian Capital has an average rating of "Moderate Buy" and an average target price of $15.12.

About Sound Point Meridian Capital

Sound Point Meridian Capital, Inc. is a publicly traded investment company focused on collateralized loan obligations (CLOs). It invests primarily in CLO equity and debt securities, which provide exposure to portfolios of corporate loans. Through these investments, the company participates in the financing of businesses whose loans are held in CLO portfolios. Its investment approach centers on selecting CLO securities rather than directly originating loans to companies. Sound Point Meridian Capital is externally managed by an affiliate of Sound Point Capital Management, a credit-focused investment manager.

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